Interest During Construction Matrix Inc. borrowed $1,100,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was completed on October 31, 2019. Expenditures related to this building were: January 1 $258,000 (includes cost of purchasing land of $150,000) May 1 310,000 July 1 420,000 October 31 275,000 In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the entire year. Required: 1. Compute the amount of interest capitalized related to the construction of the building. 2. If the expenditures are assumed to have been incurred evenly throughout the year: Compute weighted average accumulated expenditures Compute the amount of interest capitalized on the building
Interest During Construction Matrix Inc. borrowed $1,100,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was completed on October 31, 2019. Expenditures related to this building were: January 1 $258,000 (includes cost of purchasing land of $150,000) May 1 310,000 July 1 420,000 October 31 275,000 In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the entire year. Required: 1. Compute the amount of interest capitalized related to the construction of the building. 2. If the expenditures are assumed to have been incurred evenly throughout the year: Compute weighted average accumulated expenditures Compute the amount of interest capitalized on the building
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Calculate the three amounts for the question that is attached.
Transcribed Image Text:Interest During Construction
Matrix Inc. borrowed $1,100,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was
completed on October 31, 2019. Expenditures related to this building were:
January 1 $258,000 (includes cost of purchasing land of $150,000)
May 1
310,000
July 1
420,000
October 31 275,000
In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the entire
year.
Required:
1. Compute the amount of interest capitalized related to the construction of the building.
2. If the expenditures are assumed to have been incurred evenly throughout the year:
Compute weighted average accumulated expenditures
Compute the amount of interest capitalized on the building
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