A Company Owns a Piece of Land That Originally Cost

Multiple Choice

A company owns a piece of land that originally cost $10,000 and has a fair market value of $8,000.It is exchanged along with $5,000 cash for another piece of land having a fair value of $13,000.The exchange had commercial substance.The proper journal entry to record this transaction is

A) Land (new) ........................15,000
Land (old) ......................10,000
Cash ...........................5,000
B) Land (new) .......................13,000
Loss on Exchange .................2,000
Land ...........................10,000
Cash ...........................5,000
C) Land (new) ........................18,000
Land (old) .....................10,000
Cash ...........................5,000
Gain on Exchange ...............3,000
D) Land (new) ........................13,000
Retained Earnings ................2,000
Land (old) ......................10,000
Cash ...........................5,000