Kleso, Intermedlate Accounting, 16e Help I S Exercise 9-9 Pearl Realty Corporati
ID: 2510039 • Letter: K
Question
Kleso, Intermedlate Accounting, 16e Help I S Exercise 9-9 Pearl Realty Corporation purchased the same size but a tract of unimproved land for $53,000. This land was improved and subdivided into building lots at an additional cost of owing to differences in location were offered for sale at different prices as follows. $28,000. These building lots were all of Price per Lot $6,000 8,000 4,800 Group No. of Lots 17 18 Operating expenses for the year allockted to this project total $17,000 Lots unsold at the year-end were tolions Group 1 Group 2 Group 3 S lots 7 lots 2 lots computational purposes to 4 decimal, At the end of the fiscal year Pearl Realty Corporation instructs you to arrive at the net income realized on this operation to date. (Round ratios for e.g. 78.7234% and final answer to 0 decimal places, eg, S,84%) Net income s Click if you would like to Show Work for this question: Open Show Wors sat umre Question Attempts:0 o, 3 usedExplanation / Answer
First of all we need to calculate the ratio of each group sales to total sales using relative sale value method and after that total cost will be allocated to each group on the basis of calculated ratios which is shown as follows:-
Total cost to be allocated = $53,000+$28,000 = $81,000
Calculation of ratio and cost allocated to each group (Amounts in $)
Calculation of total sales and cost of goods sold (Amounts in $)
Calculation of Net Income (Amounts in $)
Therefore net income is $110,816.
Group No. of Lots (A) Price per lot (B) Selling Price (C = A*B) Sales Proportion (D) (%) Total cost (E) Cost Allocated (F = E*D) Cost per Lot (F/A) 1 9 6,000 54,000 (54,000/276,400) = 19.5369% 81,000 15,825 1,758.33 2 17 8,000 136,000 (136,000/276,400) = 49.2041% 81,000 39,855 2,344.41 3 18 4,800 86,400 (86,400/276,400) = 31.2590% 81,000 25,320 1,406.67 Total 276,400 81,000Related Questions
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