Larsen Realty Corporation purchased a tract of unimproved land for $59,000. This

Question

Larsen Realty Corporation purchased a tract of unimproved land for $59,000. This land was improved and subdivided into building lots at an additional cost of $31,000. 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 $4,568
2 15 6,090
3 19 3,045


Operating expenses for the year allocated to this project total $27,710. 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 Larsen Realty Corporation instructs you to arrive at the net income realized on this operation to date. (When computing costs to determine net income, do not round the percentages for relative sales price. Round all other computations and final answer to 0 decimal places, e.g. 15,210.)

Net income $

Explanation / Answer

Purchase Price of Unimproved Land 59000 Add : Additional Cost                        31000 Total     Cost of 43 lots purchased                                            90000 Cost of each lot 2093 Revenue from Lots sold : Group 1 - 4 lots @4,568 18272 Group2 -8 lots @6090 48720 Group3 - 17 lots @3045 51765 Revenue from Sles 118757 Cost of 19 lots sold 39767 Gross Profit Less:operating Expenses -27710 Net Income 12057

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