AC553_W1_Solution13_51

AC553_W1_Solution13_51 - : Down payment . . . . . . . . . ....

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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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