Exercise 9-9 Sheridan Realty Corporation purchased a tract of unimproved land fo
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Question
Exercise 9-9
Sheridan 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 Sheridan 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
Relative Sales value method Solution
Group No. of Lots Price/Lot Total SellingPrice Relative Sales
Price Cost Allocated Per Lot 1 9 $5,100 $45,900 19.54% $15,434.15 $1,714.91 2 17 $6,800 $115,600 49.20% $38,871.20 $2,286.54 3 18 $4,080 $73,440 31.26% $24,694.65 $1,371.92 Total 44 $234,940 100.00% $79,000
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