Windsor Realty Corporation purchased a tract of unimproved land for $50,000. Thi
ID: 2561495 • Letter: W
Question
Windsor 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 $29,000. 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 $15,000. Lots unsold at the year-end were as follows.
At the end of the fiscal year Windsor 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
1 9 $5,100 2 17 6,800 3 18 4,080Explanation / Answer
Net Income for the operation will be calculated by tfirst calculating cost of each lot which will be calculated by taking sale value as the proportion to divide costs.
Group No. of Lots Price per lot Sale value Percent of total sales value Cost allocated Cost per lot Lot Sold Sales value Cost 1 9 5,100 $45,900 45,900/234,940 19.5369% 79,000*19.54% $15,434 $1,715 4 $20,400 $6,860 2 17 6,800 $115,600 115,600/234,940 49.2041% 79,000*49.2% $38,871 $2,287 10 $68,000 $22,865 3 18 4,080 $73,440 73,440/234,940 31.2590% 79,000*31.26% $24,695 $1,372 16 $65,280 $21,951 $234,940 $79,000 $153,680 $51,676Related Questions
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