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7. A building was constructed last year for Agro Co. for use as a production facility. Construction began on January 1 and was completed on December 31. The payments to the contractor were as follows. Date Payment 1/1 $600,000 3/31 700,000 9/30 1,000,000 11/1 800,000 To finance construction of the building, a $1,500,000, 12% construction loan was taken out on January 1. The loan was repaid on December 31. The firm had two sources of general debt: $800,000 note payable, 8% annual interest, and $1,200,000 par value bonds, 10% annual interest. Determine the amount of interest to be capitalized

7. A building was constructed last year for Agro Co. for use as a production facility. Construction began on January 1 and was completed on December 31. The payments to the contractor were as follows. Date Payment 1/1 $600,000 3/31 700,000 9/30 1,000,000 11/1 800,000 To finance construction of the building, a $1,500,000, 12% construction loan was taken out on January 1. The loan was repaid on December 31. The firm had two sources of general debt: $800,000 note payable, 8% annual interest, and $1,200,000 par value bonds, 10% annual interest. Determine the amount of interest to be capitalized

FINANCIAL ACCOUNTING
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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7. A building was constructed last year for Agro Co. for use as a production facility. Construction began on January 1 and was completed on December 31. The payments to the contractor were as follows. Date Payment 1/1 $600,000 3/31 700,000 9/30 1,000,000 11/1 800,000 To finance construction of the building, a $1,500,000, 12% construction loan was taken out on January 1. The loan was repaid on December 31. The firm had two sources of general debt: $800,000 note payable, 8% annual interest, and $1,200,000 par value bonds, 10% annual interest. Determine the amount of interest to be capitalized
Transcribed Image Text:7. A building was constructed last year for Agro Co. for use as a production facility. Construction began on January 1 and was completed on December 31. The payments to the contractor were as follows. Date Payment 1/1 $600,000 3/31 700,000 9/30 1,000,000 11/1 800,000 To finance construction of the building, a $1,500,000, 12% construction loan was taken out on January 1. The loan was repaid on December 31. The firm had two sources of general debt: $800,000 note payable, 8% annual interest, and $1,200,000 par value bonds, 10% annual interest. Determine the amount of interest to be capitalized
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