Markus Inc. is constructing a warehouse that will take about 18 months to complete. It began construction on January 1, 2012. The following payments were made during 2012. January 31 March 31 200 000 450 000 June 30 100 000 October 31 200 000 November 30 250 000 The first payment on January 31 was funded from the entity's pool of debt. However, the entity succeeded in raising a medium-term loan for an amount of $800 000 on March 31, 2012, with simple interest of 9 percent per year, calculated and payable monthly in arrears. These funds were specifically used for this construction. Excess funds were temporarily invested at 6 percent per year monthly in arrears and payable in cash. The pool of debt was again used for a $200 000 payment on November 30, which could not be funded from the medium term- loan. The construction project was temporarily halted for three weeks in May, when substantial technical and administrative work was carried out. The following amounts of debt were outstanding at the Statement of financial Position date, December 31,2012 Medium-term loan (aj above) Bank overdraft 800 000 1 200 000 (The weighted average amount outstanding during the year was $ 750 000, and total interest charged by the bank amounted to $33 000 for the year) A 10%, Zvear note dated October 12, 1997, with simple interest payable annually at December 31. 9 000 000 Reauired: Determine the amount to be capitalized to the warehouse in 2012.

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Chapter1: Financial Statements And Business Decisions
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Markus Inc. is constructing a warehouse that will take about 18 months to complete. It began construction
on January 1, 2012. The following payments were made during 2012.
January 31
March 31
200 000
450 000
June 30
100 000
October 31
200 000
November 30
250 000
The first payment on January 31 was funded from the entity's pool of debt. However, the entity
succeeded in raising a medium-term loan for an amount of $800 000 on March 31, 2012, with simple
interest of 9 percent per year, calculated and payable monthly in arrears. These funds were specifically
used for this construction. Excess funds were temporarily invested at 6 percent per year monthly in
arrears and payable in cash. The pool of debt was again used for a $200 000 payment on November 30,
which could not be funded from the medium term- loan.
The construction project was temporarily halted for three weeks in May, when substantial technical and
administrative work was carried out.
The following amounts of debt were outstanding at the Statement of financial Position date, December
31,2012
Medium-term loan (aj above)
Bank overdraft
800 000
1 200 000
(The weighted average amount outstanding during
the year was $ 750 000, and total interest charged
by the bank amounted to $33 000 for the year)
A 10%, Zvear note dated October 12, 1997, with simple interest payable
annually at December 31.
9 000 000
Reauired: Determine the amount to be capitalized to the warehouse in 2012.
Transcribed Image Text:Markus Inc. is constructing a warehouse that will take about 18 months to complete. It began construction on January 1, 2012. The following payments were made during 2012. January 31 March 31 200 000 450 000 June 30 100 000 October 31 200 000 November 30 250 000 The first payment on January 31 was funded from the entity's pool of debt. However, the entity succeeded in raising a medium-term loan for an amount of $800 000 on March 31, 2012, with simple interest of 9 percent per year, calculated and payable monthly in arrears. These funds were specifically used for this construction. Excess funds were temporarily invested at 6 percent per year monthly in arrears and payable in cash. The pool of debt was again used for a $200 000 payment on November 30, which could not be funded from the medium term- loan. The construction project was temporarily halted for three weeks in May, when substantial technical and administrative work was carried out. The following amounts of debt were outstanding at the Statement of financial Position date, December 31,2012 Medium-term loan (aj above) Bank overdraft 800 000 1 200 000 (The weighted average amount outstanding during the year was $ 750 000, and total interest charged by the bank amounted to $33 000 for the year) A 10%, Zvear note dated October 12, 1997, with simple interest payable annually at December 31. 9 000 000 Reauired: Determine the amount to be capitalized to the warehouse in 2012.
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