Phil Collins Realty Corporation purchased a tract of unimproved land for $50,000
ID: 2467073 • Letter: P
Question
Phil Collins 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 1 9 $3,750 2 18 5,000 3 19 2,500 Operating expenses for the year allocated to this project total $15,300. Lots unsold at the year-end were as follows. Group 1 5 lots Group 2 8 lots Group 3 4 lots At the end of the fiscal year Phil Collins 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%. Round cost per lot and final answer to 0 decimal places, e.g. 5,845.) Net income $Entry field with incorrect answer now contains modified data
Explanation / Answer
Net Income Calculation Sales Revenue: Group 1 (9 plots) 3750*9 33,750 Group 2 (18 plots) 5000*18 90,000 Group 3 (19 plots) 2500*19 47,500 171,250 Add: Closing Stock Group 1 (5 plots) 1254*5 6,270 Group 2 (8 plots) 1254*8 10,032 Group 3 (4 plots) 1254*4 5,016 *cost per plot = (land cost + improvement cost)/No of plots 21,318 = (50,000 + 29,000)/63 = 1,254 Less: Operating Expenses (15,300) Net Income $177,268