Indigo Realty Corporation purchased a tract of unimproved land for $51,000. This
ID: 2554896 • Letter: I
Question
Indigo 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 $27,000. These building lots were all of the same size but owing to differences in location were offered for sale at different prices as follows.
Operating expenses for the year allocated to this project total $16,000. Lots unsold at the year-end were as follows.
2 lots
At the end of the fiscal year Indigo 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 $______________
Exercise 9-9Explanation / Answer
Group No. of Lots Unsold Sold Group 1 9 5 4 Group 2 16 7 9 Group 3 16 2 14 Total 41 14 27 Group No. of Lots Price per Lot Total Price % of Whole Allocate Cost Per Unit No. Unit Sold COGS Sales Revenue 1 9 6,000 54,000 20.8655% 16,275.12 1,808.35 4 7,233.38 24,000 2 16 8,000 1,28,000 49.4590% 38,578.05 2,411.13 9 21,700.15 72,000 3 16 4,800 76,800 29.6754% 23,146.83 1,446.68 14 20,253.48 67,200 41 2,58,800 78,000 27 49,187.02 1,63,200 Sales Revenue 1,63,200 COGS -49,187 Operating Expences -16,000 Net Income 98,013