Sheffield Realty Corporation purchased a tract of unimproved land for $115,500. This land was improved and subdivided into building lots at an additional cost of $72,366. These building lots were all of the same sizes but owing to differences in location were offered for sale at different prices as follow:

Group

No. of Lots

Price per Lot

1 8 $4,500

2 16 6,000

3 17 3,600

Operating expenses for the year allocated to this project total $18,000. Lots unsold at the year-end were as follows.

Group 1 5 lots

Group 2 7 lots

Group 3 2 lots

At the end of the fiscal year, Kingbird Realty Corporation instructs you to arrive at the net income realized on this operation to date.

Question

Business

Nickers

24 April, 03:36

Sheffield Realty Corporation purchased a tract of unimproved land for $115,500. This land was improved and subdivided into building lots at an additional cost of $72,366. These building lots were all of the same sizes but owing to differences in location were offered for sale at different prices as follow:

Group

No. of Lots

Price per Lot

1 8 $4,500

2 16 6,000

3 17 3,600

Operating expenses for the year allocated to this project total $18,000. Lots unsold at the year-end were as follows.

Group 1 5 lots

Group 2 7 lots

Group 3 2 lots

At the end of the fiscal year, Kingbird Realty Corporation instructs you to arrive at the net income realized on this operation to date.

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Answers (1)

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Jimena Black · Answer 1

Sheffield Realty Corporation

Sales Revenue : Group 1 (3 * $4,500) $13,500

Group 2 (9*6,000) 54,000

Group 3 (15*3,600) 54,000

283,500

Cost of Lot sold (123,697)

Gross Profit 159,803

Operating Expenses (18,000)

Net Income 141,803

Workings

1. Total cost of building = cost of land + additional cost

= $115,500 + $72,336

= $187,836

2. Total Number of lots available for sales = 8 + 16 + 17 = 41

3. Number of lot sold = (8-5) + (16 - 7) + (17-2) = 27

4. cost per Lot = $187,836 / 41 = $4,581.37

5. cost of lot sold = $4,581.37 * 27 = $123,696.88

$123,697