Swifty Company began construction of a new building during 2025. The building is expected to be completed on December 31, 2025. During 2025, payments to the contractor are $432,000 on January 4, $288,000 on May 1, and $372,000 on October 1. Swifty has secured a construction loan of $428,000 at 7% interest on January 4, 2025. The company also has $11,300,000 in 9% bonds outstanding in 2026 and 2025. What is the interest amount to capitalize? Interest to capitalize $

Swifty Company began construction of a new building during 2025. The building is expected to be completed on December 31, 2025. During 2025, payments to the contractor are $432,000 on January 4, $288,000 on May 1, and $372,000 on October 1. Swifty has secured a construction loan of $428,000 at 7% interest on January 4, 2025. The company also has $11,300,000 in 9% bonds outstanding in 2026 and 2025. What is the interest amount to capitalize? Interest to capitalize $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Metlock Company began construction of a new building during 2025. The building is expected to be completed on December 31, 2025. During 2025, payments to the contractor are $540,000 on January 4, $252,000 on May 1, and $456,000 on October 1. Metlock has secured a construction loan of $506,000 at 6% interest on January 4, 2025. The company also has $8,850,000 in 9% bonds outstanding in 2026 and 2025. What is the interest amount to capitalize? Interest to capitalize $ eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer
Doeren Inc. began constructing a building for its use on January 1, 2022. All costs associated with the construction are being debited to an account called “Construction-in-Progress.” The construction will take approximately 24 months. Weighted-average expenditures for 2022 have already been determined to be $5,000,000. The company has one specific, as well as two non-specific loan borrowings. Details are as follows: Specific Loan Borrowing: $4,000,000 loan at 9% taken out 1/1/2022 and due in 2025. Non-specific Borrowings: Note #1: $2,000,000 at 10%. This loan was outstanding for all of 2022 and is due in 2023. Note #2: $500,000 at 12%. This loan was outstanding for all of 2022 and is due in 2024. A) What portion of the interest on all of its loans should be capitalized in 2022?
Metlock Company began construction of a new building during 2025. The building is expected to be completed on December 31, 2025. During 2025, payments to the contractor are $540,000 on January 4, $252,000 on May 1, and $456,000 on October 1. Metlock has secured a construction loan of $506,000 at 6% interest on January 4, 2025. The company also has $8,850,000 in 9% bonds outstanding in 2026 and 2025. What is the interest amount to capitalize? Interest to capitalize $
Doeren Inc. began constructing a building for its use on January 1, 2022. All costs associated with the construction are being debited to an account called “Construction-in-Progress.” The construction will take approximately 24 months. Weighted-average expenditures for 2022 have already been determined to be $5,000,000. The company has one specific, as well as two non-specific loan borrowings. Details are as follows: Specific Loan Borrowing: $4,000,000 loan at 9% taken out 1/1/2022 and due in 2025. Non-specific Borrowings: Note #1: $2,000,000 at 10%. This loan was outstanding for all of 2022 and is due in 2023. Note #2: $500,000 at 12%. This loan was outstanding for all of 2022 and is due in 2024. If the company has already accrued and paid the 2022 interest costs on these three loans by debiting “Interest Expense” and crediting “Cash”, what adjusting journal entry should be made on 12/31/22 to capitalize interest in 2022?
Vaughn Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $10,000,000 on January 1, 2025. Vaughn expected to complete the building by December 31, 2025. Vaughn has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2024 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2026 Long-term loan-11% interest, payable on January 1 of each year; principal payable on January 1, 2029 (a) Assume that Vaughn completed the office and warehouse building on December 31, 2025, as planned, at a total cost of $10,400,000, and the weighted-average amount of accumulated expenditures was $7,200,000. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final answers to O decimal places, e.g. 5,275.)…
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On June 1, 2023, a company began construction of a new manufacturing plant. The plant was completed on October 31, 2024. Expenditures on the project were as follows ($ in millions): July 1, 2023 October 1, 2023 February 1, 2024 April 1, 2024 September 1, 2024 October 1, 2024 On July 1, 2023, the company obtained a $94 million construction loan with a 8% interest rate. The loan was outstanding through the end of October, 2024. The company's only other interest-bearing debt was a long-term note for $100 million with an interest rate of 10%. This note was outstanding during all of 2023 and 2024. The company's fiscal year-end is December 31. What is the amount of interest that should be capitalized in 2023, using the specific interest method? Multiple Choice $3.99 million $4.04 million 78 46 54 33 32 18 $5.05 million None of the other answer choices are correct
On January 1, 2021, the company obtained a $3 million loan with a 11% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 March 1, 2021 June 30, 2021 October 1, 2021 January 31, 2022 April 30, 2022 August 31, 2022 On January 1, 2021, the company obtained a $3 million construction loan with a 11% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company's other interest-bearing debt included two long-term notes of $5,100,000 and $7,100,000 with interest rates of 7% and 9%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company's fiscal year-end is December 31. Required: 1. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the weighted-average method. 2. What is the total cost of the building? 3. Calculate the…
Sunland Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $9,000,000 on January 1, 2025. Sunland expected to complete the building by December 31, 2025. Sunland has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2024 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2026 Long-term loan-11% interest, payable on January 1 of each year: principal payable on January 1, 2029 (a) (b) Compute the depreciation expense for the year ended December 31, 2026. Sunland elected to depreciate the building on a straight-line basis and determined that the asset has a useful life of 30 years and a salvage value of $540,000. (Round answer to O decimal places, e.g. 5,275.) Depreciation expense $3,600,000 2,700,000 1,800,000 $
On January 1, 2021, the company obtained a $3 million loan with a 12% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 $ 1,240,000 March 1, 2021 660,000 June 30, 2021 450,000 October 1, 2021 650,000 January 31, 2022 900,000 April 30, 2022 1,215,000 August 31, 2022 2,160,000 On January 1, 2021, the company obtained a $3 million construction loan with a 12% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company’s other interest-bearing debt included two long-term notes of $5,400,000 and $7,400,000 with interest rates of 6% and 8%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company’s fiscal year-end is December 31. Required:1. Calculate the amount of interest that Mason should…
On January 1, 2021, the company obtained a $3 million loan with a 10% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 March 1, 2021 June 30, 2021 October 1, 2021 January 31, 2022 April 30, 2022 August 31, 2022 On January 1, 2021, the company obtained a $3 million construction loan with a 10% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company's other interest-bearing debt included two long-term notes of $4,400,000 and $6,400,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company's fiscal year-end is December 31. $1,300,000 720,000 340,000 640,000 450,000 765,000 1,260,000 Required: 1. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the weighted-average method. 2.…