Riley Company paid $60,000 cash to purchase land from Clay Company. Clay origina

ID: 2330482 • Letter: R

Question

Riley Company paid $60,000 cash to purchase land from Clay Company. Clay originally paid $60,000 for the land.

a. Did this event cause the balance in Riley's cash account to increase, decrease, or remain unchanged?

b. Did this event cause the balance in Clay's cash account to increase, decrease, or remain unchanged?

c. Did this event cause the balance in Riley's land account to increase, decrease, or remain unchanged?

d. Did this event cause the balance in Clay's land account to increase, decrease, or remain unchanged?

e. Was this event an asset source, use, or exchange transaction for Riley Company?

f. Was this event an asset source, use, or exchange transaction for Clay Company?

Answer to Part a.

The event caused decrease in cash in Riley's cash account as cash is paid to purchase the land.

Answer to Part b.

The event caused an increase in Clay's cash account, as cash is reverece on sale of land to Riley.

Answer to Part c.

The event caused an increase in Riley's land account as Value of land account will increase on purchase of land.

Answer to Part d.

The Balance in Clay's land account will deceraae as land is sold and the land account will decrease by the book value of land sold.

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