Bridgeport Realty Corporation purchased a tract of unimproved land for $52,000.

Question

Bridgeport Realty Corporation purchased a tract of unimproved land for $52,000. 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. Group No. of Lots Price per Lot 1 9 $3,300 2 17 4,400 3 16 2,640 Operating expenses for the year allocated to this project total $15,000. Lots unsold at the year-end were as follows. Group 1 5 lots Group 2 7 lots Group 3 2 lots At the end of the fiscal year Bridgeport 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 0 decimal places, e.g. 5,845.) Net income $Entry field with incorrect answer 30827

Explanation / Answer

[All the amounts were in $]

Land cost = 52000 Inprovement cost = 28000

Total cost = 80000. Number of buildings constructed = 9+17+16 = 42.

Cost incurred for one building = 80000/42 = 1905.

Operating expenses incurred = 15000 has to be considered only for the buildings which are sold.

Total no of buildings sold with different prices with percentage on total are as follows:

Total. . . . . . . . 94160.................15000

It is assumed that land and improvement cost for all the buildings were equal.

So, total cost of buildings sold = 1905 X (4+10+14) = 53340

Net income = 94160 - 53340 - 15000 = 25820.

Group Nos Price total inc % operating exp 1 4 3300 13200 14.0187% 2103 2 10 4400 44000 46.7290% 7009 3 14 2640 36960 39.2523% 5888

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