Table 17-1
in 2016, a Developer Sells Land For $\$ 800,000$

question 56

Multiple Choice

Table 17-1
In 2016, a developer sells land for $\$ 800,000$ . The cost of the land was $\$ 500,000$ . He receives a $\$ 200000$ down payment plus three instalments of $\$ 300,000$ , $\$ 200000$ and $\$ 100,000$ which will be paid in 2017, 2018 and 2019 . He uses the instalment method to record revenue. It is decided that $10 \%$ is the appropriate rate of interest.
-Refer to Table 17-1.What amount of profit will be recorded when the developer makes the sale and receives the down payment?

• A)$100 000
• B)$513 148
• C)$713 148
• D)$213 148

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Definitions:

Inventory Loan

A secured short-term loan to purchase inventory.

Cash Disbursement

The payment of money from a fund or account, typically involving the transfer of cash to individuals or companies for services rendered or goods purchased.

Operating Cycle

The period from purchasing inventory to collecting cash from the sale of that inventory.

Accounts Receivable Financing

A type of financing arrangement in which a company uses its receivables as collateral for a loan, effectively selling its right to future payments in exchange for immediate cash.