USA Baffled by accounting for sale of asset


Joined
Jan 31, 2021
Messages
5
Reaction score
0
Country
United States
I am baffled by how to properly record the sale of House, not because of the expense portion of the transaction, but the income. To close out the House asset, I need a debit say 30,000 and the expenses will be a credit say 5,000, but the income will be recorded also as a credit say 25,000. That entry is balanced but it is on the wrong side for an increase in income. Yet, for sale of an asset the income is normally on the credit side, but it's on the debit side. Maybe I am not including enough steps in this but I can't find it in textbooks.
How do I get income to the correct side?
Or may it is How to completely record the sale of an asset?
 
Ad

Advertisements

Joined
Dec 19, 2020
Messages
52
Reaction score
3
Country
United States
In order to properly answer the question - what needs to be known is whether or not this is a personal residence, or whether it's a house that was used for the production of income (rental property). If a personal residence, was any part of it used for an office in home? If solely a personal residence, did the owner live in it for 2 out of the last 5 years?
There are different rules for each.
 
Joined
Jan 31, 2021
Messages
5
Reaction score
0
Country
United States
Sorry. Forgot to mention it is an investment. Totally unoccupied by self
 
Joined
Aug 10, 2020
Messages
14
Reaction score
0
Country
United States
That would be the gain on the sale of the asset, which for purposes of this example is $25,000. That is a credit entry.
 
Ad

Advertisements

Joined
Jan 31, 2021
Messages
5
Reaction score
0
Country
United States
My confusion is normally income resides on the debit side.
 
Joined
Aug 10, 2020
Messages
14
Reaction score
0
Country
United States
Income is an income statement account. On the income statement, revenue has a credit balance.

Cash is a balance sheet account. On the balance sheet, cash has a debit balance.
 
Ad

Advertisements

Joined
Jan 31, 2021
Messages
5
Reaction score
0
Country
United States
Hmm. That statement doesn't bode well for my records. That may mean I have a lot of stuff on the wrong sides.
Okay. End of conversation.
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top