Early in 2019, Dobbs Corporation engaged Kiner, Inc. to design and construct a complete modernization of Dobbs's manufacturing facility. Construction was begun on June 1, 2019 and was completed on December 31, 2019. Dobbs made the following payments to Kiner, Inc. during 2019: Date Payment June 1, 2019 August 31, 2019 December 31, 2019 $2,000,000 3,000,000 2,550,000 In order to help finance the construction, Dobbs issued the following during 2019: 1. $1,700,000 of 10-year, 9% bonds payable, issued at par on May 31, 2019, with interest payable annually on May 31. 300,000 shares of no-par common stock, issued at $10 per share on October 1, 2019. 2. In addition to the 9% bonds payable, the only debt outstanding during 2019 was a $425,000, 12% note payable dated January 1, 2013 and due January 1, 2023, with interest payable annually on January 1. Compute the amounts of each of the following (show computations) 1. Weighted-average accumulated expenditures qualifying for capitalization of interest cost. 2. Avoidable interest incurred during 2019. Total amount of interest cost to be capitalized during 3. 2019.

Early in 2019, Dobbs Corporation engaged Kiner, Inc. to design and construct a complete modernization of Dobbs's manufacturing facility. Construction was begun on June 1, 2019 and was completed on December 31, 2019. Dobbs made the following payments to Kiner, Inc. during 2019: Date Payment June 1, 2019 August 31, 2019 December 31, 2019 $2,000,000 3,000,000 2,550,000 In order to help finance the construction, Dobbs issued the following during 2019: 1. $1,700,000 of 10-year, 9% bonds payable, issued at par on May 31, 2019, with interest payable annually on May 31. 300,000 shares of no-par common stock, issued at $10 per share on October 1, 2019. 2. In addition to the 9% bonds payable, the only debt outstanding during 2019 was a $425,000, 12% note payable dated January 1, 2013 and due January 1, 2023, with interest payable annually on January 1. Compute the amounts of each of the following (show computations) 1. Weighted-average accumulated expenditures qualifying for capitalization of interest cost. 2. Avoidable interest incurred during 2019. Total amount of interest cost to be capitalized during 3. 2019.

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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