9. Long Term Assets: Hard #11 11. A company is constructing amanufacturing facility. To finance the facilitythe company borrowed $800,000 from thebank at an annual interest rate of 9% onMarch 1st. Construction began on February1st of the current year and ended onOctober 31st of the following year.Payments made to the contractor were asfollows:stFebruary 1$ 200,000July 1st$ 600,000stDecember 1$ 800,000stMarch 1$ 900,000stJuly 1$ 700,000Total Cost$3,200,000The company has other long-term bankfinancing borrowed in prior years in theamount of $1,000,000 at an annual interestrate of 8% and $500,000 at an annualinterest rate of 6%.Make all the required entries related to theconstruction of the manufacturing facilityfor the year the construction of the facilitywas completed.

Answered: Long Term Assets

Business

Accounting

Long Term Assets

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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Question

9. Long Term Assets: Hard #11

11. A company is constructing a
manufacturing facility. To finance the facility
the company borrowed $800,000 from the
bank at an annual interest rate of 9% on
March 1st. Construction began on February
1st of the current year and ended on
October 31st of the following year.
Payments made to the contractor were as
follows:
st
February 1
$ 200,000
July 1st
$ 600,000
st
December 1
$ 800,000
st
March 1
$ 900,000
st
July 1
$ 700,000
Total Cost
$3,200,000
The company has other long-term bank
financing borrowed in prior years in the
amount of $1,000,000 at an annual interest
rate of 8% and $500,000 at an annual
interest rate of 6%.
Make all the required entries related to the
construction of the manufacturing facility
for the year the construction of the facility
was completed.

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