Exercise 9-9 Teal Realty Corporation purchased a tract of unimproved land for $5

Question

Exercise 9-9 Teal 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 Group No. of Lots Price per Lot $4,500 6,000 3,600 16 17 Operating expenses for the year allocated to this project total $18,000. 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 Teal 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.) Net income

Explanation / Answer

Number of plots available for sale = 8 + 16 + 17 = 41

Number of plots remain unsold = 14 plots

Available unsold sold price amount Group - 1 8 5 3 4500 13500 Group - 2 16 7 9 6000 54000 Group - 3 17 2 15 3600 54000 Total sale value of all plots sold      = 121500 Cost of PLOTS sold =       79000 / 41 * 27 52024        Gross profit    = 69476 Operating expenses = 18000 NET INCOME 51476

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