Sweet Realty Corporation purchased a tract of unimproved land for $50,000. This
ID: 2396417 • Letter: S
Question
Sweet Realty Corporation purchased a tract of unimproved land for $50,000. This land was improved and subdivided into building lots at an additional cost of $30,000. 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 8 $5,700 2 15 7,600 3 17 4,560 Operating expenses for the year allocated to this project total $17,000. 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 Sweet 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 $
Explanation / Answer
Total cost
Land purchased : 50000
improvment cost :30000
Operating cost : 17000
Total : 97000
Realized revenue :
Lot 1 5700 * (8-5) : 17100
Lot 2 7600 * (15-7): 60800
lot 3 4560 * (17-2): 68400
Total 146300
Net income realized : 146300-97000 = 49300$
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