Buxton Realty Group had two completed unsold buildings on hand on January 1, 2016.

Unit 06-92: Cost, $790,000; retail price, $964,000

Unit 06-94: Cost, $873,000; retail price, $1,008,000

During the period January 1 through March 31, the company completed the following construction jobs:

________________________Cost____________Sales Price

Unit 06-95...................$1,900,000...............$2,290,000

Unit 07-01.......................919,000.................1,178,000

Unit 07-03.......................836,000.................1,115,000

Unit 07-05.....................1,120,000.................1,450,500

All the units except 06-92 and 07-05 were sold in the quarter ending March 31.

INSTRUCTIONS

1. Determine the appropriate costing method for inventory in this construction business.

2. What value should be reported in the balance sheet for the company for the unsold units on March 31? Assume that it is firmly believed that the two houses will be sold for the retail price shown.

3. Determine the cost of goods sold in the first quarter, assuming that all houses sold were sold for the retail prices listed.

Analyze:

What is gross profit on sales for the quarter ending March 31?