Jasmine sold land for $250,000 in 2014.The land had a basis of $118,000 and she incurred selling expenses of $10,000.Jasmine received $50,000 cash down in 2014 and will receive five additional annual payments of $40,000 each.What is Jasmine's gross profit percentage on the sale?

Question

Quizplus · Accepted Answer

To calculate Jasmine's gross profit percentage, we need to first determine her total gross profit, which is the selling price minus the basis and selling expenses:

Total gross profit = $250,000 - $118,000 - $10,000 = $122,000

Next, we need to calculate the total revenue Jasmine will receive from the sale, which includes the $50,000 cash down payment and the five annual payments of $40,000 each:

Total revenue = $50,000 + ($40,000 x 5) = $250,000

Now, we can calculate the gross profit percentage by dividing the total gross profit by the total revenue and multiplying by 100:

Gross profit percentage = (Total gross profit / Total revenue) x 100
= ($122,000 / $250,000) x 100
= 48.8%

Therefore, the best choice is B, which is the gross profit percentage of 48.8%.

Jasmine Sold Land for $250,000 in 2014