Hawkins Corporation began construction of a motel on March 31, 2021. The project was completed on April 30, 2022. No new loans were required to fund construction. Hawkins does have the following two interest-bearing liabilities that were outstanding throughout the construction period: $5,100,000, 6% note $14,540,000, 10% bonds
Hawkins Corporation began construction of a motel on March 31, 2021. The project was completed on April 30, 2022. No new loans were required to fund construction. Hawkins does have the following two interest-bearing liabilities that were outstanding throughout the construction period: $5,100,000, 6% note $14,540,000, 10% bonds
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hawkins Corporation began construction of a motel on March 31, 2021. The project was completed on April 30, 2022. No new loans were required to fund construction. Hawkins does have the following two interest-bearing liabilities that were outstanding throughout the construction period:
$5,100,000, 6% note
$14,540,000, 10% bonds
Construction expenditures incurred were as follows:
| March 31, 2021 | $ | 3,910,000 | |
| June 30, 2021 | 5,910,000 | ||
| November 30, 2021 | 1,782,000 | ||
| February 28, 2022 | 2,910,000 | ||
The company’s fiscal year-end is December 31.
Required:
Calculate the amount of interest capitalized for 2021 and 2022. (Round weighted average interest rate to 2 decimal places and final answers to the nearest whole dollar.)
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