help with E9-9. Steps please 478 Chapter 9 Inventories: Additional Valuation Iss

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help with E9-9. Steps please

478 Chapter 9 Inventories: Additional Valuation Issues E9-9 (L03) EXCEL (Relative Sales Value Method) Phil Collins Realty Corporation purchased a tract of unimproved land for $55,000. This land was improved and subdivided into building lots at an additional cost of 534.460. These building lots were all of the same size but owing to differences in location were offered for sale at different prices as follows Group No 3,00 4,000 2,400 17 Operating expenses for the year allocated to this project total $18,200, Lots unsold at the year-end were as follows Group 1s Group 2 Group 7 Sots Instructions At the end of the fiscal year Phil Collins Realty Corporation instructs you to arrive at the net income realized on this operation to date E9-10 (Lo3) (Relative Sales Value Method) During 2017, Pretenders Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Pretenders for a lump sum of $59,850 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below. No. of Chis Estimated Selling Price Each Lounge chairs Armchains Straight chairs 590 50 300 During 2017, Pretenders sell: 200 Joungs chairs, 100 armchalirs, and 1230 straight chairs instructions

Explanation / Answer

Group No. of Lots Price Per Lot Gross Sales 1 9         3,000.00      27,000.00 2 15         4,000.00      60,000.00 3 17         2,400.00      40,800.00    127,800.00 Cost of Tract       55,000.00 cost of Improvement       34,460.00 Total Cost of Tract land       89,460.00 Group1 Group2 Group3 Total No. of unsold lots 5 7 2 14 No. of Lots Sold 9 15 17 41 14 22 19 55 Cost of Tract land       22,771.64      35,784.00    30,904.36    89,460.00 Cost of Unsold Tract land         8,132.73      11,385.82      3,253.09    22,771.64 Cost of sold Tract land       14,638.91      24,398.18    27,651.27    66,688.36 Calculation of Net Income Sales    127,800.00 Cost of Tract Land      89,460.00 Operating Expenses      18,200.00 Net Income      20,140.00

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