Reference no: EM132827856

Problem 1: Jessica sold an apartment building, in which she had a $400,000 adjusted basis, for $1,100,000. The buyer paid $150,000 down, assumed Jessica's mortgage, and signed an installment obligation with a face value of $500,000. $50,000 of principal was paid at the end of the year of sale. Jessica's contract price, gross profit percentage, and payment in the year of sale are:

a. $550,000, 100 percent, and $200,000
b. $700,000, 100 percent, and $200,000
c. $700,000, 100 percent, and $250,000
d. $1,100,000, 60 percent, and $200,000