I\'m doing general, double-entry journal entries for a series of business transa

Question

I'm doing general, double-entry journal entries for a series of business transactions. The following took place on May 4th: "Purchased land and a building at a cost of $150,000 of which $50,000 was regarded as applicable to the land. Paid $20,000 cash and signed a note for the rest." What would the corresponding journal entry look like? Should I list separate accounts for both the land and the building? I'm fairly certain I should also be including a cash account and notes payable account, but I'm confused as to how the numbers would break down there.

Explanation / Answer

Entries would be:

Land Dr 50,000

Building Dr 100,000

Cash                      20,000

Notes payable        130,000

Since total amount payable is 150,000 for the transaction and 20,000 is paid in cash, the balance is payable by a note i.e. 130,000

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