Question 2 Partially correct Mark 2.79 out of 5.00 Flag question Valuing Inventory and Recording Entries Using Relative Sales Value Method Arizona Developers purchased for cash and subdivided a tract of land that cost $900,000. The subdivisions were divided on the following basis. 10% used for streets, alleys, and parks 50% divided into 100 lots selling at $4,000 each 30% divided into 200 lots selling at $3,000 each 10% divided into 100 lots selling at $2,000 each a. Prepare the entry for the purchase of the lots. Use the relative sales value method to allocate the total cost of $900,000 to the three categories of lots. Assume a perpetual inventory system. Account Name Inventory-Lot Category 1 Dr. Cr. 0 x Inventory-Lot Category 2 Inventory-Lot Category 3 Cash 0 x 0 x 900,000 b. During the final month of the year, the paving was completed (included in the $900,000 cost) and several sales occurred. Inventory remaining at the first year-end was: 20 of the $4,000 lots; 50 of the $3,000 lots; lots. 1. Compute the valuation of inventory at the first year-end. Inventory-Lot Category 1 $ 0 x Inventory-Lot Category 2 0 x Inventory-Lot Category 3 0 x Total 0 x 2. Prepare the entry for sales and cost of goods sold for each category of lots 1, 2 and 3 separately. Assume cash sales. Cash Cost of Goods Sold Sales Inventory Account Name To record sale of lots in category 1 Cash Cost of Goods Sold Sales Inventory To record sale of lots in category 2 Cash Cost of Goods Sold Sales Inventory To record sale of lots in category 3 Check Dr. Cr. 0 x 0 x 0 0 0 x 0 x = 0 x 0~ 0 x 0 x 0 x O 0 0 0 x 0 x