Differ: Gain from sales of property vs Proceeds from sales of property

[NPH]

I am not sure I am right. Can you help me?

Gain from sales of property = Sales price - land cost - construction costs - holding costs - commission

Proceeds from sales of property = Sales price - loan and Interest - holding costs - commission

[solomon]

Realized and Gain

Money received plus liability relief plus fmv other property received minus selling expenses minus liability assumed minus money or property given up equals amount realized.

Amount realized minus adjusted basis equals Gain or Loss.

[NPH]

Proceeds from sales is the revenue account?

[abby]

gross vs net

Gross Proceeds from Sale is the Revenue, Net Proceeds is the cash received.

Normally the journal entry to account for the sale would entail multiple entries to account for receipt of gross proceeds, payoff of the loan and calculation of gain by removing the basis of the property/including accounting for closing costs and expensing any items paid for in the transaction (taxes, interest, etc) and, finally, an entry to cash to account for the net proceeds received.

I often do two journal entries, one to record the sale and a second to calculate the gain. The gross proceeds are placed in a Suspense account in the first journal entry so it can be backed out to balance the second.

Is this anywhere near to answering your question?

[S T]

Accounting

Abby, Great Accounting Post! We all from time to time can use some assistance!

Glad to see you are still here!

Sandy

[abby]

Sandy

than you so much for the kind words -

[NPH]

Thanks a lot.

Is my formular correct?

I know how to book sales and gain. How can I book the net proceed?

[abby]

I guess I don't quite know what you're asking

Net proceeds is the cash received in most cases, yes?

The first journal entry records the items on the settlement statement - Gross proceeds to Revenue, loan payoff to the loan, expenses to expense accounts, closing costs to basis or a suspense account to use for basis in the second journal entry which is the gain calculation.

The balancing entry is the Net Proceeds, and that would usually be a debit to the cash account - simply a deposit to cash.

If you want to book the net proceeds before you do the larger entry because you need to record the receipt of the check, then it would go to a suspense account, to be backed out later.

Still not sure I'm answering your question. If not, I apologize, I just can't quite get what your needing.

[S T]

I am not sure either

Gain = the sales price of the property less sales costs involved, such as commissions, and closing cost subtracting the original cost of the property, improvements and other costs associated with purchase that had to be capitalized. Then you would also have the component of any depreciation that you might have claimed on the property.

Net proceeds is only for recording the (actual cash) income received which is not equal to your actual gain. Loan payoffs, etc would be deducted to arrive at the net proceeds which would probably be accounted for in the deposit to the bank account.

Does that help?

Sandy