Question Details

Doran Realty Company purchased a plot of ground 



Ex. 1 - Relative sales value method.
Doran Realty Company purchased a plot of ground for $800,000 and spent $2,100,000 in developing it for building lots. The lots were classified into Highland, Midland, and Lowland grades, to sell at $100,000, $75,000, and $50,000 each, respectively.

Instructions
Complete the table below to allocate the cost of the lots using a relative sales value method.
	No. of	   Selling	     Total	     % of	     Apportioned Cost 	
Grade	Lots	    Price    	  Revenue  	Total Sales	    Total     	  Per Lot	
Highland	20	$	$		$	$
Midland	40	$				$
Lowland	100	$	                 		                 	$
	160		$               		$               	  

Ex. 2—Gross profit method.
An inventory taken the morning after a large theft discloses $60,000 of goods on hand as of March 12.  The following additional data is available from the books:

	Inventory on hand, March 1	$ 84,000
	Purchases received, March 1 - 11	63,000
	Sales (goods delivered to customers)	120,000

Past records indicate that sales are made at 50% above cost.

Instructions
Estimate the inventory of goods on hand at the close of business on March 11 by the gross profit method and determine the amount of the theft loss.  Show appropriate titles for all amounts in your presentation.



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