Question

Joe's Jalopies sold one of its warehouses for $300,000 cash plus a tractor with a fair market value of $25,000. The building had a mortgage against it for $50,000 that was assumed by the buyer and an adjusted basis of $130,000. Joe's had to pay $20,000 in sales commissions to the Realtor who coordinated the sale. What is the amount realized by Joe's Jalopies?

A) $355,000
B) $245,000
C) $325,000
D) $300,000
E) $305,000

Answer 1

A) $355,000

Step-by-step explanation:

To determine how much money Joe's Jalopies earned with these sales we can use the following equation:

money earned = sales price of warehouse + sales price of tractor + mortgage assumed by buyer - sales commissions

money earned = $300,000 + $25,000 +$50,000 - $20,000 = $355,000