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bhaktipatel
January 9, 2025
Question

Journal entry for sale of property

  • January 9, 2025
  • 1 reply
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Our company sold a property for 1.48M where the net proceeds from the trust was for 1.47M which was received in the bank. But I still have a open inventory account for the same property for 1.8M; how do I record the journal entry to close the inventory and for the sale of property as it is a income for the company?

    1 reply

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    ElijahStownton
    February 13, 2025

    Hello,

     

    You’ll debit your bank account for $1.47M (since that’s what you actually received) and credit sales revenue (or Other Income if you categorize property sales separately) for $1.48M. If there were closing costs or any additional deductions, those should be recorded separately as an expense.

     

    Next, remove the property from your inventory. Since it was recorded at $1.8M, you need to credit the inventory account for that full amount and debit either the Cost of Goods Sold (COGS) or an inventory adjustment account.

     

    Now, since you sold the property for less than its recorded value, you have a loss of $320K ($1.8M – $1.48M). You should debit Loss on the Sale of Assets for that amount to reflect it accurately in your financials.

     

    This should help

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