Blue Realty Corporation purchased a tract of unimproved land for $51,000. This l

Question

Blue 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 $27,000. 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

Operating expenses for the year allocated to this project total $16,000. Lots unsold at the year-end were as follows.

At the end of the fiscal year Blue 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.)

Group

No. of Lots

Price per Lot

Explanation / Answer

Relative sales value method No of * price per = selling Relative sales price * total = cost cost per Group lots lot price cost allocated lot 1 9 6,000 54000 54000/258800 78,000 16275 1808 2 16 8,000 128000 128000/258800 78,000 38578 2411 3 16 4,800 76800 76800/258800 78,000 23147 1447 258800 78000 lots * price total Cost per ttoal cost sold per lot sales lot of goods sold Group 1 4 6,000 24000 1808 7233 2 9 8,000 72000 2411 21700 3 14 4,800 67200 1447 20253 163200 49187 Calculation of Net income Sales 163200 less cost of goods sold 49187 Gross profit 114013 Expenses 16,000 Net income 98013 Answer

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