Donna purchased investment land on January 1, Year 3, for $150,000. On January 1, Year 5, she sold the land for $40,000 cash down-payment plus the buyer signed a note for $300,000 to be paid evenly over the next 3 years, beginning January 1, Year 6. The buyer assumed Donna's $70,000 mortgage on the land. Donna also paid selling expenses of $22,000. For purposes of the installment sales method, what is the gross profit percentage on the sale? 70% 58% 61% 79%
Donna purchased investment land on January 1, Year 3, for $150,000. On January 1, Year 5, she sold the land for $40,000 cash down-payment plus the buyer signed a note for $300,000 to be paid evenly over the next 3 years, beginning January 1, Year 6. The buyer assumed Donna's $70,000 mortgage on the land. Donna also paid selling expenses of $22,000. For purposes of the installment sales method, what is the gross profit percentage on the sale? 70% 58% 61% 79%
Chapter3: Income Sources
Section: Chapter Questions
Problem 97IIP
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Transcribed Image Text:Donna purchased investment land on January 1, Year 3, for $150,000. On January 1, Year 5, she
sold the land for $40,000 cash down-payment plus the buyer signed a note for $300,000 to be
paid evenly over the next 3 years, beginning January 1, Year 6. The buyer assumed Donna's
$70,000 mortgage on the land. Donna also paid selling expenses of $22,000. For purposes of the
installment sales method, what is the gross profit percentage on the sale?
70%
58%
61%
79%
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Publisher:
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