Jasmine sold land for $250,000 in 2015. The land had a basis of $118,000 and she incurred selling expenses of $10,000. Jasmine received $50,000 cash down in 2015 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

First we need to calculate the total amount of gross profit:
Total sales price = $250,000 
Selling expenses = $10,000 
Basis = $118,000 
Gain on sale = $250,000 - $118,000 - $10,000 = $122,000 
Next we need to calculate the gross profit percentage:
Gross profit percentage = (gain on sale / total sales price) x 100 
Gross profit percentage = ($122,000 / $250,000) x 100 = 48.8% 
Therefore, the answer is B.

Jasmine Sold Land for $250,000 in 2015