Oriole realty corporation purchased a tract of unimproved land for $132,000. this land was improved and subdivided into building lots at an additional cost of $82,704. 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 1 9 $7,200 2 15 9,600 3 17 5,760 operating expenses for the year allocated to this project total $43,680. 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 oriole 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  29503

Explanation:

First we need to allocate the land and improvement cost over the lots, we are going to do so based on the revenue:

groups NºLot$ per Lot Revenue Cost per Group Per lot

A         9         720064,80044,937.46484,993.0516

B          159600      144,00099,861.03296657.4022

C          17  5760  97,92067,905.50233,994.4413

Total Revenue  306720  

We divide the group revenue over the total revenue and multiply by the land

and land improvements

Then we take the allocation per group and divde over the total number of lot

We do the same with the allocate expenses:

groups NºLot$ per Lot Revenue Cost per Group Per lot

A           97200648009228.1691025.3521

B          15960014400020507.04231367.1362

C          1757609792013944.7887820.2817

Total revenue  306720

Next we solve for the sol lots:

A 9 lots less 5 unsold = 4

B 15 lots less 7 unsold = 8

C 17 lots less 2 unsold = 15

And we proceeds to do the income statement

Revenue sold x market price

Group A428800

Group B876800

Group C1586400

 192000

Cost lot sold x (allocate operating + allocate land and improvements)

group A     24073.6148

group B      48147.2296

group C         90276.0555

Total expenses 162496.8999

Net income  29503