If the sale is for cash, the difference between the cost and the selling price, as these terms have been qualified above, will show at once the profit which is earned and realized. The entries required are simply the posting of the amount received, from the cash book to the credit side of Real Estate account. If the transaction has yielded a profit, a credit balance will result to this account, which is best disposed of immediately.

The balance, or profit, may, theoretically, be carried direct to Profit and Loss but it is preferable to carry all such items into a special account, "Gain on Sales" or "Profits," and at the close of the fiscal period to carry the balance of this account to Profit and Loss. (See SectionSection 235, 236.)

The journal entry required to transfer the credit balance of the Real Estate account to Profits would be as follows:

Real Estate ......................................

$......

To Profits ............................

$......

For profits earned on sale of property No.......

In this instance and in those which follow, the gain from a sale, when carried to Profits account, may be carried to Profit and Loss at the end of the fiscal period, while the same profit carried to Gain on Sales should be treated in the manner described in Chapter XX (Earned Profits And Book Profits. Section 143. Book Profits).