Question

Jace purchased a home for $225,000. He later added another room for $25,300. He sold the home five years later for $305,000 and paid a sales commission of $12,000. Jace's gain on the sale is:

A. $42,700
B. $54,700
C. $68,000
D. $80,000

Answer 1

A. $42,700

Step-by-step explanation:

In order to calculate the gain on sale we will start from the selling price that Jace got when he sold the home. He sold the house for 305,000 in order to calculate the gain we will subtract all the costs associated with the house. His first cost was the purchasing of the house of 225,000, his second costs was of the addition of another room for 25,300 and his final cost was of 12,000 sales commission.

Gain on sale = 305,000-(225,000+25,300+12,000)=42,700