Early in 2015, Logan Corporation engaged Reese, Inc. to design and construct a complete modernization of Logan's manufacturing facility. Construction was begun on January 1, 2015 and was completed on December 31, 2015. Logan made the following payments to Reese, Inc. during 2015:   Date Payment June 1, 2015 $2,400,000 August 31, 2015 3,600,000 December 31, 2015 3,000,000 In order to help finance the construction, Logan issued $2,000,000 of 10-year, 9% bonds payable, issued at par on January 2, 2015, with interest payable annually on December 31. In addition to the 9% bonds payable, the only debt outstanding during 2015 was a $500,000, 12% note payable dated January 1, 2010 and due January 1, 2020, with interest payable annually on January 1 and a $1,000,000, 10% bond payable dated July 1, 2011 due June 30, 2021 with interest paid annually. Compute the amounts of each of the following (show computations): Interest to be capitalized in 2015. Logan uses the specific interest method.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Early in 2015, Logan Corporation engaged Reese, Inc. to design and construct a complete modernization of Logan's manufacturing facility. Construction was begun on January 1, 2015 and was completed on December 31, 2015. Logan made the following payments to Reese, Inc. during 2015:

 

Date

Payment

June 1, 2015

$2,400,000

August 31, 2015

3,600,000

December 31, 2015

3,000,000

In order to help finance the construction, Logan issued $2,000,000 of 10-year, 9% bonds payable, issued at par on January 2, 2015, with interest payable annually on December 31.

In addition to the 9% bonds payable, the only debt outstanding during 2015 was a $500,000, 12% note payable dated January 1, 2010 and due January 1, 2020, with interest payable annually on January 1 and a $1,000,000, 10% bond payable dated July 1, 2011 due June 30, 2021 with interest paid annually.

Compute the amounts of each of the following (show computations):

Interest to be capitalized in 2015. Logan uses the specific interest method.  

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