Question 1 Pina Realty Corporation purchased a tract of unimproved land for $51,
ID: 2508324 • Letter: Q
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Question 1 Pina Realty Corporation purchased a tract of unimproved land for $51,000. This land was improved and subdivided into building lots at an additional cost of $28,000. These building lots were all of the same size but owing to differences in location were offered for sale at different prices as follows No. of Lots Price per Lot $3,600 4,800 2,880 Group 9 17 18 2 Operating expenses for the year allocated to this project total $16,000, Lots unsold at the year-end were as follows Group 1 Group 2 Group 3 5 lots 7 lots 2 lots At the end of the fiscal year Pina Realty Corporation instructs you to arrive at the net income realized on this operation to date. (Round ratios for computational purposes to 4 decimal places, e.g. 78.7234% and final answer to o decimal places, e.g. 5,845.) Net incomeExplanation / Answer
Net income is $40,910
Grp
No of Lot
Sales price
Total sales price
Relative sales price as %
Cost total
Cost allocated
Cost per lot
1
9
3600
32400
20%
79000
15800
1756
2
17
4800
81600
49%
79000
38710
2277
3
18
2880
51840
31%
79000
24490
1361
165840
Grp
No of Lot
Sales price
Total sales price
Cost per unit
Extended cost
Gross profit
1
4
3600
14400
1756
7024
7376
2
10
4800
48000
2277
22770
25230
3
16
2880
46080
1361
21776
24304
108480
51570
56910
Calculation of Net Income
Sales revenue (from schedule) $1,08,480
Cost of goods sold (from schedule) $51,570
Gross profit $56,910
Operating expenses $16.000
Net income $40,910
Grp
No of Lot
Sales price
Total sales price
Relative sales price as %
Cost total
Cost allocated
Cost per lot
1
9
3600
32400
20%
79000
15800
1756
2
17
4800
81600
49%
79000
38710
2277
3
18
2880
51840
31%
79000
24490
1361
165840
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