Question

inventory g Ronald Homes purchased land for development for $2,500,000. The land will be parceled into lots and sold for vacation homes as follows: 10 lots (Type A) to sell for $100,000 each; 15 lots (Type B) to sell for $70,000 each; and 20 lots (Type C) to sell for $50,000 each. At what amount should Ronald Homes record the Type B lots

Answer 1

Ronald Homes

The amount at which Ronald Homes should record Type B lots is $860,656 while each should be recorded at $57,377.

Step-by-step explanation:

a) Data and Calculations:

Cost of land for development = $2,500,000

Land parceled into lots as follows:

Type A (10 lots) to sell for $100,000 each = $1,000,000

Type B (15 lots) to sell for $70,000 each = 1,050,000

Type C (20 lots) to sell for $50,000 each = 1,000,000

Total sales value = $3,050,000

Type A lots to be recorded at $1,000,000/$3,050,000 * $2,500,000

= $819,672

Type B lots to be recorded at: $1,050,000/$3,050,000 * $2,500,000

= $860,656

Type C lots to be recorded at $1,000,000/$3,050,000 * $2,500,000

= $819,672