37. Apartment building manager reports revenue of $1,350 per month. He was 100% occupied for the...

37. Apartment building manager reports revenue of $1,350 per month. He was 100% occupied for the year. He pays $70 per month for water & trash for the complex. His insurance was $1,050 for the year. His payment on the building were $8,400 for the year. $4,815 of it was interest. He was $50 in advertising expense for the year. Maintenance totaled for year totaled $925. He will be depreciating the property $2,320 for the year. He is also depreciating a Heat & Air unit at $815 for the year, which he bought and installed this year for the cost of $5,000. He has $5,300 in his business bank account and is holding deposits of $1,300 in escrow. The land is valued at $20,000. The building is valued at 116,000 with the land. Total depreciation on the building has been $25,000. He owns the local printer $65; the plumber, $420 and the local paper $50. He owes $73,500 on the property. Property taxes for the year are $1,725. The owner paid income tax of $12,500 this year.

How much are total annual expenses for the Profit and Loss Statement?

(A) $3,470.00 (B) $12,540.00 (C) $2,935.00 (D) None of the above

Expert Solution

12,540 is correct answer,

Total annual expense would be as follow-

Water and traces $840 (70*12)

Insurance $1050

Interest $4815

Advertising expense. $50

Maintenance $925

Depreciation property . $2320

Depreciation heat and air $815

Property tax . $1725

Total annual expense. $ 12,540

Total amount own to plumber etc seems prepaid expenses and hence not been included in the annual expense.
Other amounts given are subject to disclosure in statement of financial position.
Depreciation on property has been taken and the amount of depreciation on building i.e 25,000 is accumulated depreciation.
Income tax expense is tax on profits, in the given case it seems that the current income tax is too high compared to income of persons business. Since both the above facts are specifically suggest not to consider income tax expense in the profit and loss statement.

Please comment for any explanation or suggestions.

ekkarill92 answered 1 year ago

41. Apartment building manager reports revenue of $1,350 per month. He was 100% occupied for the...

41. Apartment building manager reports revenue of $1,350 per month. He was 100% occupied for the year. He pays $70 per month for water & trash for the complex. His insurance was $1,050 for the year. His payment on the building were $8,400 for the year. $4,815 of it was interest. He was $50 in advertising expense for the year. Maintenance totaled for year totaled $925. He will be depreciating the property $2,320 for the year. He is also depreciating...

A 100 unit apartment building is for sale. It rents for 500/unit per month. Operating expenses...

A 100 unit apartment building is for sale. It rents for 500/unit per month. Operating expenses for the building are 200,000 per year and property taxes are 10,000 a year. Lisa wants to buy it and thus needs to arrange a mortgage loan of 3,000,000 at j4 = 10% amortized over 25 years with monthly payments. The banker assessed the lending value of the property to be 4,000,000. The banker requires a minimum DCR of 1.15, (a) Does Lisa qualify...

Part1) Bob's Apartment Building has 100 units that rent for $1,110 per month each. What is...

Part1) Bob's Apartment Building has 100 units that rent for $1,110 per month each. What is the Gross Potential Income for Bob's Apartment Building? Part2) Bob's Apartment Building has gross potential income of $1,000,000. The expected vacancy rate is 13%. Collection losses are 5% (after allowing for vacancies). Incidental income is $50,000 per year. What is the Effective Gross Income for Bob's Apartment Building? Part3) Bob's Apartment Building has effective gross income of $500,000. Operating expenses are 38% of revenue....

The manager of a large apartment complex knows from experience that 90 units will be occupied...

The manager of a large apartment complex knows from experience that 90 units will be occupied if the rent is 468 dollars per month. A market survey suggests that, on the average, one additional unit will remain vacant for each 9 dollar increase in rent. Similarly, one additional unit will be occupied for each 9 dollar decrease in rent. What rent should the manager charge to maximize revenue?

You are buying a mismanaged 64-unit apartment building for $3,000,000. Rents are $800 per unit per month...

You are buying a mismanaged 64-unit apartment building for $3,000,000. Rents are $800 per unit per month and expenses are $500 per unit per month, but the property is 10% vacant. You think you can turn the property around in three years by increasing rents $75 per year at each unit, keeping operating expenses constant. Vacancy will decrease to 7.5% in year 2 and 5% in year 3. The bank requires you put 25% down. Terms include a 25-year amortization at 4.0%. You...

The business manager of a 90 unit apartment building is trying to determine the rent to...

The business manager of a 90 unit apartment building is trying to determine the rent to be charged. From past experience with similar buildings, when rent is set at $400, all the units are full. For every $20 increase in rent, one additional unit remains vacant. What rent should be charged for maximum total revenue? What is that maximum total revenue? To help solve the above scenario, perform an internet search for Profit Parabola or Applications of Quadratic Functions. List...

Underwriting information: 200 unit apartment building 1,000 per month average rent 8% vacancy 40% total operating...

Underwriting information: 200 unit apartment building 1,000 per month average rent 8% vacancy 40% total operating expense ratio 3% growth rate Purchase price is $20 million Exit cap rate is 7.5% Unlevered discount rate is 8% Assume 5 year holding period 2. Assume the above but now with the following loan information: Loan principal of $10 million 5% interest rate 30 year term with amortization 2% loan fees Calculate levered cash flows Calculate net sales proceeds after debt repayment What...

Underwriting information: 200 unit apartment building 1,000 per month average rent 8% vacancy 38% total operating...

Underwriting information: 200 unit apartment building 1,000 per month average rent 8% vacancy 38% total operating expense ratio Replacement Reserves of $250 per unit per year 3% growth rate Purchase price is $20 million Exit cap rate is 7.5% Sales costs are 2% Unlevered discount rate is 8% Assume 5 year holding period Part 1 - Prepare 5 year pro forma operating statement What is cap rate on the purchase price? Determine the sales price at the end of year...

The business manager of a 90 unit apartment building is trying to determine the rent to be charged.