According to Alma 21:1, there was a city of Jerusalem which was "away joining the borders of Mormon." If we assume that this was the Jerusalem spoken of in 3 Nephi 9:7, then this Jerusalem was sunk, and waters were "caused to come up in the stead thereof." In view of the text and our logic, we probably should entertain the idea that Jerusalem was by a large body of water. It probably was a lake (and not a sea) because the "borders of Mormon" were close to the land of Nephi which was "up", and not down by the sea. Furthermore, this lake might have been part of what was considered the "waters of Mormon." [Alan C. Miner, Personal Notes]
3 Nephi 9:7 The city of Jerusalem [have I caused to be sunk] . . . and waters have I caused to come up in the stead thereof ([Illustration]): [According to John Sorenson] the leading geographical correlation of Book of Mormon lands with the modern map puts the city of Jerusalem, built by the Lamanites and Nephite dissenters (see Alma 21:2), at this location in southern Guatemala, near the village of Santiago Atitlan. Third Nephi 9:7 reports that the city was destroyed by waters that did "come up in the stead thereof." Lake Atitlan is prone to sharp rises and falls in its level due to the volcanic geology of its environs. [John L. Sorenson, Images of Ancient America, p. 205]