Exercise 10-24 (Algo) Interest capitalization [L010-7] On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The company borrowed $2,150,000 at 9% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021: $8,000,000, 14% bonds $2,000,000, 9% long-term note Construction expenditures incurred during 2021 were as follows: $880,000 January 1 March 31 1,480,000 1,136,000 880,000 June 30 September 30 December 31 680,000 Required: Calculate the amount of interest capitalized for 2021 using the specific interest method. (Do not round the intermediate calculat Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).) X Answer is not complete.
Exercise 10-24 (Algo) Interest capitalization [L010-7] On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The company borrowed $2,150,000 at 9% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021: $8,000,000, 14% bonds $2,000,000, 9% long-term note Construction expenditures incurred during 2021 were as follows: $880,000 January 1 March 31 1,480,000 1,136,000 880,000 June 30 September 30 December 31 680,000 Required: Calculate the amount of interest capitalized for 2021 using the specific interest method. (Do not round the intermediate calculat Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).) X Answer is not complete.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Exercise 10-24 (Algo) Interest capitalization [LO10-7]
On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was
completed in 2022. The company borrowed $2,150,000 at 9% on January 1 to help finance the construction. In addition to the
construction loan, Highlands had the following debt outstanding throughout 2021:
$8,000,000, 14% bonds
$2,000,000, 9% long-term note
Construction expenditures incurred during 2021 were as follows:
$ 880,000
1,480,000
1,136,000
880,000
680,000
January 1
March 31
June 30
September 30
December 31
Required:
Calculate the amount of interest capitalized for 2021 using the specific interest method. (Do not round the intermediate calculations.
Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).)
X Answer is not complete.
Date
Expenditure
Weight
Average
January 1
2$
880,000
12/12
$
880,000
March 31
1,480,000 x
9/12 O =
111,000 X
June 30
1,136,000 x
6/12 O
568,000
000 00](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3e1bfd6a-3cb6-4031-858f-4ba8da8545b1%2F3b9d7281-09c9-4574-a3ce-29e13c01c7f8%2Fdp4nit_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 10-24 (Algo) Interest capitalization [LO10-7]
On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was
completed in 2022. The company borrowed $2,150,000 at 9% on January 1 to help finance the construction. In addition to the
construction loan, Highlands had the following debt outstanding throughout 2021:
$8,000,000, 14% bonds
$2,000,000, 9% long-term note
Construction expenditures incurred during 2021 were as follows:
$ 880,000
1,480,000
1,136,000
880,000
680,000
January 1
March 31
June 30
September 30
December 31
Required:
Calculate the amount of interest capitalized for 2021 using the specific interest method. (Do not round the intermediate calculations.
Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).)
X Answer is not complete.
Date
Expenditure
Weight
Average
January 1
2$
880,000
12/12
$
880,000
March 31
1,480,000 x
9/12 O =
111,000 X
June 30
1,136,000 x
6/12 O
568,000
000 00
![Construction expenditures incurred during 2021 were as follows:
January 1
March 31
000 088
1,480,000
1,136,000
880,000
680,000
June 30
September 30
December 31
Required:
Calculate the amount of interest capitalized for 2021 using the specific interest method. (Do not round the intermediate calculations.
Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).)
Answer is not complete.
Date
Expenditure
Weight
Average
January 1
$
880,000 O x
12/12 O =
$
880,000
March 31
1,480,000 O x
9/12
111,000
June 30
1,136,000 O x
6/12 O
568,000
September 30
880,000
3/12 O
220,000
December 31
680,000
0/12 O=
Accumulated expenditure
$ 5,056,000
$ 1,779,000
Capitalized
Interest
Amount
Interest Rate
Average accumulated
expenditures
$1,779,000
Construction loan
2,150,000
0.
All loans
7.0 X %](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3e1bfd6a-3cb6-4031-858f-4ba8da8545b1%2F3b9d7281-09c9-4574-a3ce-29e13c01c7f8%2Ft44kp6d_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Construction expenditures incurred during 2021 were as follows:
January 1
March 31
000 088
1,480,000
1,136,000
880,000
680,000
June 30
September 30
December 31
Required:
Calculate the amount of interest capitalized for 2021 using the specific interest method. (Do not round the intermediate calculations.
Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).)
Answer is not complete.
Date
Expenditure
Weight
Average
January 1
$
880,000 O x
12/12 O =
$
880,000
March 31
1,480,000 O x
9/12
111,000
June 30
1,136,000 O x
6/12 O
568,000
September 30
880,000
3/12 O
220,000
December 31
680,000
0/12 O=
Accumulated expenditure
$ 5,056,000
$ 1,779,000
Capitalized
Interest
Amount
Interest Rate
Average accumulated
expenditures
$1,779,000
Construction loan
2,150,000
0.
All loans
7.0 X %
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