Exercise 9-9 Oriole Realty Corporation purchased a tract of unimproved land for

Question

Exercise 9-9 Oriole 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 $29,000. 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 $5,400 7,200 4,320 16 17 Operating expenses for the year allocated to this project total $18,000. 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 Oriole 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. 78.723496 and final answer to 0 decimal places, e.g. 5,845.) Net income Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Total cost of land = 55000 + 29000 = 84000

Number of lots made from land = 9+16+17 = 42

Cost per lot = 84000/42 = 2000

Closing stock of lots = 5+7+2 = 14

Cost price of lots sold = (42-14)*2000 = 56000

Sale price of Lots sold = 4*5400 + 9*7200 + 15*4320 = 21600+64800+64800 = 151200

Operating cost of project = 18000

Net income realised on this operation to date = 151200 - 56000 - 18000 = 77200

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