AC553_W1_Solution13_51

# AC553_W1_Solution13_51 - Down payment \$10,000 Mortgage...

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1 Problem 13-51 Solution Steve's share of the mortgage must have been \$30,000 (\$100,000 1 \$10,000 1 \$60,000). Installment Sales: Computation of Gain (¶13,655) a. The contract price is : Down payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$10,000 Installment obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 Excess of mortgage assumed over basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 Contract price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$80,000 b. Gross profit percentage = 100% (\$80,000 ÷ \$80,000). c. Payments in year of sale
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Unformatted text preview: : Down payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$10,000 Mortgage assumed over basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 Installment payment made . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 Payments in year of sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$25,000 × gross profit percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . × 1.00 d. Gross profit recognized in year of sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$25,000...
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