Pina Realty Corporation purchased a tract of unimproved land for $54,000. This l
ID: 2580016 • Letter: P
Question
Pina Realty Corporation purchased a tract of unimproved land for $54,000. 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 $18,000. Lots unsold at the year-end were as follows.
At the end of the fiscal year Pina 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.)
Explanation / Answer
no of price per selling price Relative sales price total cost cost cost Group lots lot allcated per lot 1 9 3,300 29700 29700/154660 83,000 15939 1771 2 17 4,400 74800 74800/154660 83,000 40142 2361 3 19 2,640 50160 50,160/154660 83,000 26919 1417 154660 83000 group lots price total cost total sold per lot sales per lot cost 1 5 3,300 16500 1771 8855 2 10 4,400 44000 2361 23613 3 17 2,640 44880 1417 24085 105380 56553 Calculation of net income sales 105,380 less cost of good sold 56,553 Gross profit 48,827 operating expense 18,000 Net income 30,827