A parcel of land that was originally purchased for $150,000 is offered for sale at $200,000, is assessed for tax purposes at $160,000, is recognized by its purchasers as easily being worth $240,000, and is sold for $244,000. At the time of the sale, assume that the seller still owed $60,000 to the bank on the land that was purchased for $160,000. Immediately after the sale, the seller paid off the loan to the bank.
Question:
Prepare journal entries for:
(i) Record the sale of the land
(ii) The payoff of the loan
(iii) The net effect (amount) of cash realized from both transactions (sale and pay-off).