1- On November 1, 2018, Almadinah Company contracted Pfeifer Construction Co. to construct a building for $1,400,000 on land costing $100,000 (purchased from the contractor and included in the first payment). Almadinah made the following payments to the construction company during 2019. January,1 200,000 March, 31 310,000 May, 31 550,000 December,1 440,000 Total 1,500,000 Almadinah Construction completed the building, ready for occupancy, on December 31, 2019. Salalah had the following debt outstanding at December 31, 2019. Specific Construction Debt 1. 15%, 3-year note to finance purchase of land and construction of the building, dated December 31, 2018, with interest payable annually on December 31 760,000 Other Debt 2. 10%, 5-year note payable, dated December 31, 2015, with interest payable annually on December 31 560,000 3. 12%, 10-year bonds issued December 31, 2014, with interest payable annually on December 31 700,000 a. Compute weighted-average accumulated expenditures for 2019. b. Compute the avoidable interest. c. Compute the actual interest cost.
1- On November 1, 2018, Almadinah Company contracted Pfeifer Construction Co. to construct a building for $1,400,000 on land costing $100,000 (purchased from the contractor and included in the first payment). Almadinah made the following payments to the construction company during 2019. January,1 200,000 March, 31 310,000 May, 31 550,000 December,1 440,000 Total 1,500,000 Almadinah Construction completed the building, ready for occupancy, on December 31, 2019. Salalah had the following debt outstanding at December 31, 2019. Specific Construction Debt 1. 15%, 3-year note to finance purchase of land and construction of the building, dated December 31, 2018, with interest payable annually on December 31 760,000 Other Debt 2. 10%, 5-year note payable, dated December 31, 2015, with interest payable annually on December 31 560,000 3. 12%, 10-year bonds issued December 31, 2014, with interest payable annually on December 31 700,000 a. Compute weighted-average accumulated expenditures for 2019. b. Compute the avoidable interest. c. Compute the actual interest cost.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1- On November 1, 2018, Almadinah Company contracted Pfeifer Construction Co. to construct a building for $1,400,000 on land costing $100,000 (purchased from the contractor and included in the first payment). Almadinah made the following payments to the construction company during 2019.
January,1 200,000
March, 31 310,000
May, 31 550,000
December,1 440,000
Total 1,500,000
Almadinah Construction completed the building, ready for occupancy, on December 31, 2019. Salalah had the following debt outstanding at December 31, 2019.
Specific Construction Debt
1. 15%, 3-year note to finance purchase of land and construction of the building, dated December 31, 2018, with interest payable annually on December 31 760,000
Other Debt
2. 10%, 5-year note payable, dated December 31, 2015, with interest payable annually on December 31 560,000
3. 12%, 10-year bonds issued December 31, 2014, with interest payable annually on December 31 700,000
a. Compute weighted-average accumulated expenditures for 2019.
b. Compute the avoidable interest.
c. Compute the actual interest cost.
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