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A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures fo construction were as follows: January 1, $620,000; March 31, $720,000; June 30, $520,000; October 30, $960,000. The company arranged a 7% loan on January 1 for $940,000. Assume the $940,000 loan is not specifically tied to the construction of the building. The company's other borrowings, outstanding for the whole year, consisted of a $3 million loan and a $5 million note with interest rates of 8% and 6%, respectively. Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year. (Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e. 0.1234 should be entered as 12.34%).) January 1, 2021 March 31, 2021 June 30, 2021 30. 303 Date Expenditure $ 620,000 720,000 x 520,000x Weight 12/12 - 9/12 6/12 $ Average 620,000 540,000 260,000

A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures fo construction were as follows: January 1, $620,000; March 31, $720,000; June 30, $520,000; October 30, $960,000. The company arranged a 7% loan on January 1 for $940,000. Assume the $940,000 loan is not specifically tied to the construction of the building. The company's other borrowings, outstanding for the whole year, consisted of a $3 million loan and a $5 million note with interest rates of 8% and 6%, respectively. Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year. (Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e. 0.1234 should be entered as 12.34%).) January 1, 2021 March 31, 2021 June 30, 2021 30. 303 Date Expenditure $ 620,000 720,000 x 520,000x Weight 12/12 - 9/12 6/12 $ Average 620,000 540,000 260,000

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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A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $620,000; March 31, $720,000; June 30, $520,000; October 30, $960,000. The company arranged a 7% loan on January 1 for $940,000. Assume the $940,000 loan is not specifically tied to the construction of the building. The company's other borrowings, outstanding for the whole year, consisted of a $3 million loan and a $5 million note with interest rates of 8% and 6%, respectively. Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year. (Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e. 0.1234 should be entered as 12.34%).) Date January 1, 2021 March 31, 2021 June 30, 2021 October 30, 2021 Accumulated expenditures Average accumulated expenditures Construction loan Other loans (not construction) Expenditure $ $ $ 620,000 720,000x 520,000 960,000 2,820,000 Average 1,580,000 Weight 12/12 = 9/12 = 6/12 = 2/12 = Interest Rate % % = = $ S $ Average Capitalized Interest $ 620,000 540,000 260,000 160,000 1,580,000 0 0 0
Transcribed Image Text:A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $620,000; March 31, $720,000; June 30, $520,000; October 30, $960,000. The company arranged a 7% loan on January 1 for $940,000. Assume the $940,000 loan is not specifically tied to the construction of the building. The company's other borrowings, outstanding for the whole year, consisted of a $3 million loan and a $5 million note with interest rates of 8% and 6%, respectively. Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year. (Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e. 0.1234 should be entered as 12.34%).) Date January 1, 2021 March 31, 2021 June 30, 2021 October 30, 2021 Accumulated expenditures Average accumulated expenditures Construction loan Other loans (not construction) Expenditure $ $ $ 620,000 720,000x 520,000 960,000 2,820,000 Average 1,580,000 Weight 12/12 = 9/12 = 6/12 = 2/12 = Interest Rate % % = = $ S $ Average Capitalized Interest $ 620,000 540,000 260,000 160,000 1,580,000 0 0 0
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