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Long Term Assets

Long Term Assets

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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.
Transcribed Image Text: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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