Kingbird Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $2,040,000 on March 1, $1,320,000 on June 1, and $3,051,830 on December 31. Kingbird Company borrowed $1,040,720 on March 1 on a 5-year, 13% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 5-year, $2,324,600 note payable and an 11%, 4-year, $3,389,200 note payable. Compute the weighted-average interest rate used for interest capitalization purposes. (Round answer to 2 decimal places, e.g. 7.58%.) Weighted-average interest rate

Kingbird Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $2,040,000 on March 1, $1,320,000 on June 1, and $3,051,830 on December 31. Kingbird Company borrowed $1,040,720 on March 1 on a 5-year, 13% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 5-year, $2,324,600 note payable and an 11%, 4-year, $3,389,200 note payable. Compute the weighted-average interest rate used for interest capitalization purposes. (Round answer to 2 decimal places, e.g. 7.58%.) Weighted-average interest rate

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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Weld Corporation is constructing a plant for its own use. Weld capitalizes interest on an annual basis. The following expenditures are made during the current year: January 1, $102,000; July 1, $986,000; September 1, $2,720,000; and December 31, $7,174,000. The following debts were outstanding throughout the current year. Debt Construction note, 12% Short-term note payable, 15% Amount $340,000 1,360,000 Accounts payable (noninterest-bearing) 1,360,000 Note: Round all of your answers to the nearest whole number or whole percentage point. a. Compute the amount of interest to be capitalized during the year. Calculation of Actual Interest Debt Debt Amount Interest rate Interest Amount Specific Debt Construction loan $ 340,000 12 % $ 40,800 General Debt Note payable $ 1,360,000 15% Total Actual Interest $ 204,000✔ 244,800 Calculation of Weighted Average Accumulated Expenditures Weighted Avg. Date January 1 July 1 $ Expenditures 102,000 ✔ 986,000 ✔ Months outstanding Accum. Expenditures 12 $…
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Ajay
Subject: accounting
Vala
Vikram
Headland Company is constructing a building Construction began on February 1 and was completed on December 31 . Expenditures were $2,076,000 on March 1,$1,224,000 on June 1 and $3,076,600 on December 31. Headland Company borrowed $1,155,090 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 9%,5-year, $2,376,900 note payable and an 10%,4-year, $3,397,000 note payable. Compute the weighted-average interest rate used for interest capitalization purposes. (Round answer to 2 decimal places, es. 7.58%.
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