**BlueFurniture Company Construction Project**BlueFurniture Company initiated the construction of a combination office and warehouse building for its own use with an estimated cost of $7,000,000 starting on January 1, 2020. The expected completion date for the building was December 31, 2020. During the construction period, Blue had the following debt obligations outstanding:- **Construction loan**: 12% interest, payable semiannually, issued on December 31, 2019, for $2,800,000.- **Short-term loan**: 10% interest, payable monthly, with principal payable at maturity on May 30, 2021, for $2,100,000.- **Long-term loan**: 11% interest, payable on January 1 of each year, with principal payable on January 1, 2024, for $1,400,000.**Task (a): Calculation of Avoidable Interest**Assume that Blue completed the office and warehouse building on December 31, 2020, as planned, at a total cost of $7,280,000. The weighted-average amount of accumulated expenditures was $5,040,000. The task is to compute the avoidable interest on this project.*Note*: Use interest rates rounded to two decimal places (e.g., 7.58%) for computational purposes and round final answers to 0 decimal places (e.g., 5,275).- **Avoidable Interest Calculation**: $ _________

Answered: Image /qna-images/answer/c6f1367a-b914-4573-8407-068a889b1535.jpgAvoidable interest = $ 568,960.

BlueFurniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $ 7,000,000 on January 1, 2020. Blue expected to complete the building by December 31, 2020. Blue has the following debt obligations outstanding during the construction period. Construction loan- 12% interest, payable semiannually, issued December 31, 2019 $ 2,800,000 Short-term loan- 10% interest, payable monthly, and principal payable at maturity on May 30, 2021 2,100,000 Long-term loan- 11% interest, payable on January 1 of each year. Principal payable on January 1, 2024 1,400,000 (a) Assume that Blue completed the office and warehouse building on December 31, 2020, as planned at a total cost of $7,280,000, and the weighted-average amount of accumulated expenditures was $ 5,040,O00. 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 0 decimal places, e.g. 5,275.) Avoidable Interest $

BlueFurniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $ 7,000,000 on January 1, 2020. Blue expected to complete the building by December 31, 2020. Blue has the following debt obligations outstanding during the construction period. Construction loan- 12% interest, payable semiannually, issued December 31, 2019 $ 2,800,000 Short-term loan- 10% interest, payable monthly, and principal payable at maturity on May 30, 2021 2,100,000 Long-term loan- 11% interest, payable on January 1 of each year. Principal payable on January 1, 2024 1,400,000 (a) Assume that Blue completed the office and warehouse building on December 31, 2020, as planned at a total cost of $7,280,000, and the weighted-average amount of accumulated expenditures was $ 5,040,O00. 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 0 decimal places, e.g. 5,275.) Avoidable Interest $

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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Subject: accounting
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