#1 Relative sales value method Adler Realty Company purchased a plot of ground for $800,000 and spent $2,100,000 in developing it for building lots. The lots were classified into Highland, Midland, and Lowland grades, to sell at $100,000, $75,000 and 50,000 each, respectively. It was determined that there were 20 Highland lots, 40 Midland lots, and 100 Lowland lots. Using the relative sales value method, determine the unit cost for each type of lot. #2 Gross profit method On January 1, a store had inventory of $48,000. January purchases were $46,000, and January sales were $90,000. On February 1 a fire destroyed most of the inventory. Average markup was 25% of cost, compute the amount of the fire loss, assuming the store had no insurance coverage. #3 Weighted average accumulated expenditures On April 1, 2014, Tyler Co. began construction of a small building. Five payments of $120,000 were made every two months beginning on April 1, 2014. The building was completed and ready for occupancy on December 1, 2014. For the purpose of determining the amount of interest to be capitalized, calculate the weighted average accumulated expenditures on the building. Hint: even though the construction period is only 8 months, the interest will be paid for the whole year. Therefore, use 12 months in determining your capitalization period. #4 Capitalization of interest To help pay for construction, Tyler Co. borrowed $50,000 on March 1 for three years at 12% interest. The only other debt outstanding during 2014 was a $500,000 mortgage at 8% interest. Using the weighted average accumulated expenditures calculated above, calculate the avoidable interest