On November 15, 2016, LaGrow Developers Sold a Parcel of Land

question 17

Multiple Choice

On November 15, 2016, LaGrow Developers sold a parcel of land for $5,000,000. They had originally paid $3,600,000 for the land. The terms of the sale called for a $1,000,000 down payment, and the balance in two equal installments payable on November 15, 2017 and November 15, 2018. Disregard interest charges. LaGrow has a December 31 year-end. Refer to LaGrow Developers. Assuming that LaGrow uses the cost-recovery method, the company would recognize gross profit in 2017 of ________. (Do not round intermediary calculations, and round your final answer to the nearest whole dollar.)

• A) $0
• B) $1,000,000
• C) $280,000
• D) $1,400,000

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Definitions:

Price Ceiling

A legal maximum price that can be charged for a good or service, usually set by the government.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a specific price level.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a specific price in a given period.

Tariffs

Taxes imposed by a government on imported goods.