Question

Sheridan Realty Corporation purchased a tract of unimproved land for $60,500. This land was improved and subdivided into building lots at an additional cost of $37,906. 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 $3,300 4,400 2,640 15 17 Operating expenses for the year allocated to this project total $20,020. Lots unsold at the year-end were as follows. Group 1 Group 2 Group 3 5 lots 7 lots 2 lots At the end of the fiscal year Sheridan 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 $

Answer 1

Answer:

Group	No of Lots	Price per Lot	Selling Price	Relative Sales price	Total Cost	Allocated Cost	Cost per Lot
1	9	$3300	$29700	20.74%	$98406	$20409	$2268
2	15	$4400	$66000	46.08%	$98406	$45346	$3023
3	18	$2640	$47520	33.18%	$98406	$32651	$1921
Totals			$143220			$98406

Group	Lots Sold	Price per Lot	Total Sales	Cost per Lot	Total Cost	Income
1	4	$3300	$13200	$2268	$9072	$4128
2	8	$4400	$35200	$3023	$24184	$11016
3	15	$2640	$39600	$1921	$28815	$10785
Totals						$25929
Less: Operating expenses						$20020
Net income						$5909

Working Notes:

Group	No of Lots	Price per Lot	Selling Price	Relative Sales price	Total Cost	Allocated Cost	Cost per Lot
1	9	$3300	9*3300	29700/143220	$60500+$37906	20.74%*98406	$20409/9
2	15	$4400	15*4400	66000/143220	$60500+$37906	46.08%*98406	$45346/15
3	17	$2640	17*2640	47520/143220	$60500+$37906	33.18%*98406	$32651/17
Totals			$143220			$98406

Group	Lots Sold	Price per Lot	Total Sales	Cost per Lot	Total Cost	Income
1	9-5	$3300	$4*3300	$2268	$4*2268	$13200-9072
2	15-7	$4400	$8*4400	$3023	$8*3023	$35200-24184
3	17-2	$2640	$15*2640	$1921	$15*1921	$39600-28815
Totals						$25929
Less: Operating expenses						$20020
Net income						$5909