Question

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.)

Answer 1

The net income realized by Oriole Realty Corporation from the sale of subdivided building lots is found by subtracting the total costs from the total revenue generated, considering the unsold lots at year-end.

Step-by-step explanation:

The question involves calculating the net income realized from the sale of building lots by the Oriole Realty Corporation. To find the net income, we need to deduct the total costs from the total revenue generated from the lots sold. The total cost includes the purchase price of the land, improvement and subdivision costs, and operating expenses. The total revenue is the sum of the sales of the available building lots, taking into account the unsold lots.

To begin, we calculate the revenue for each group by multiplying the number of lots sold by the price per lot. Then, we sum these amounts to find the total revenue. After that, we calculate the total costs by adding the purchase price of the land, subdivision costs, and operating expenses. Finally, we subtract the total costs from the total revenue to ascertain the net income realized to date.

Since specific numbers were not provided for each step in the initial question, the solution will be explained conceptually instead of with exact figures.

Answer 2

Net income 29503

Step-by-step 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 7200 64,800 44,937.4648 4,993.0516

B 15 9600 144,000 99,861.0329 6657.4022

C 17 5760 97,920 67,905.5023 3,994.4413

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 9 7200 64800 9228.169 1025.3521

B 15 9600 144000 20507.0423 1367.1362

C 17 5760 97920 13944.7887 820.2817

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 A 4 28800

Group B 8 76800

Group C 15 86400

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