Exercise 9-9 Sage Realty Corporation purchased a tract of unimproved land for $5

Question

Exercise 9-9 Sage 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 ,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 Sage 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, eg. 78.723496 and final answer to O decimal places, e.g. 5,845 Net income Question Attempts: 0 of 3 used SAVE FOR LATER SUBMIT ANSWER

Explanation / Answer

Group No. of Lots * Price Per Lot = Total Sale Relative Sales Price(Total Sale/237240) * Total Cost = Cost Allocated Cost Per Lot 1 9 5400 48600 0.204855842 84000 17207.89074 1911.98786 2 16 7200 115200 0.485584219 84000 40789.07436 2549.317147 3 17 4320 73440 0.309559939 84000 26003.0349 1529.590288 237240 84000 Group No. of Lots * Price Per Lot = Total Sales Cost Per Lot COGS 1 4 5400 21600 1911.98786 7647.951442 2 9 7200 64800 2549.317147 22943.85432 3 15 4320 64800 1529.590288 22943.85432 151200 53535.66009 Sales 151200 (COGS) 53536 Gross Profit 97664 Less: Expenses 29000 Net Income 68664

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