Question

X Your answer is incorrect. Try again. Nash Realty Corporation purchased a tract of unimproved land for $33,000. This land was improved and subdivided into building lots at an additional cost of $20,676. These building lots were all of the same size but owing to differences in location were offered for sale at different prices as follows Price per Lot Group No. of Lots $1,800 1 2 15 2,400 17 3 1,440 Operating expenses for the year allocated to this project total $10,920. Lots unsold at the year-end were as follows. 5 lots Group 1 Group 2 Group 3 7 lots 2 lots At the end of the fiscal year Nash 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 ans wer to 0 decimal places, e.g. 5,845.) X Net income 2,316

Answer 1

	Net Income	=	$    3,480
	Workings:
	Group	No. Of Lots	Price per lot	Total Price	Weight	Cost	Cost allocated	Cost per Lot
		(i)	(ii)	(iii) = (i) X (ii)	(iv) = (iii) / $76680	(v) = ($33000+$20676)	(vi) = (iv) X (v)	(vii) = (vi) / (i)
	1	9	$    1,800	$ 16,200	21.1268%	$ 53,676	$ 11,340	$    1,260
	2	15	$    2,400	$ 36,000	46.9484%	$ 53,676	$ 25,200	$    1,680
	3	17	$    1,440	$ 24,480	31.9249%	$ 53,676	$ 17,136	$    1,008
	Total			$ 76,680
	Group	No. Of Lots sold	Price per lot	Total Price	Cost per Lot	Cost of goods sold	Gross profit
		(i)	(ii)	(iii) = (i) X (ii)	(iv) = above calculated	(v) = (i) X (iv)	(vi) = (iii) - (v)
	1	4	$    1,800	$    7,200	$    1,260	$    5,040	$    2,160
	2	8	$    2,400	$ 19,200	$    1,680	$ 13,440	$    5,760
	3	15	$    1,440	$ 21,600	$    1,008	$ 15,120	$    6,480
	Total			$ 48,000			$ 14,400
	Gross profit	=	$ 14,400
Less:	Operating Income	=	$ 10,920
	Net Income	=	$    3,480