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Question 1 Pina Realty Corporation purchased a tract of unimproved land for $51,

ID: 2508324 • Letter: Q

Question

Question 1 Pina 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 $28,000. These building lots were all of the same size but owing to differences in location were offered for sale at different prices as follows No. of Lots Price per Lot $3,600 4,800 2,880 Group 9 17 18 2 Operating expenses for the year allocated to this project total $16,000, 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 Pina 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 o decimal places, e.g. 5,845.) Net income

Explanation / Answer

Net income is $40,910

Grp

No of Lot

Sales price

Total sales price

Relative sales price as %

Cost total

Cost allocated

Cost per lot

1

9

3600

32400

20%

79000

15800

1756

2

17

4800

81600

49%

79000

38710

2277

3

18

2880

51840

31%

79000

24490

1361

165840

Grp

No of Lot

Sales price

Total sales price

Cost per unit

Extended cost

Gross profit

1

4

3600

14400

1756

7024

7376

2

10

4800

48000

2277

22770

25230

3

16

2880

46080

1361

21776

24304

108480

51570

56910

Calculation of Net Income

Sales revenue (from schedule)           $1,08,480

Cost of goods sold (from schedule)   $51,570

Gross profit $56,910

Operating expenses $16.000

Net income                                       $40,910

                                           

Grp

No of Lot

Sales price

Total sales price

Relative sales price as %

Cost total

Cost allocated

Cost per lot

1

9

3600

32400

20%

79000

15800

1756

2

17

4800

81600

49%

79000

38710

2277

3

18

2880

51840

31%

79000

24490

1361

165840

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