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nary 1, 2021 ch 1, 2021 e 30, 2021 ober 1, 2021 nary 31, 2022 El 30, 2022 $1,050,000 630,000 710,000 610,000 315,000 630,000

nary 1, 2021 ch 1, 2021 e 30, 2021 ober 1, 2021 nary 31, 2022 El 30, 2022 $1,050,000 630,000 710,000 610,000 315,000 630,000

FINANCIAL ACCOUNTING
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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What are the Required 1-3? (filling in the empty cells)

On January 1, 2021, the company obtained a $3 million loan with a 12% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as +follows: се. January 1, 2021 March 1, 2021 June 30, 2021 October 1, 2021 January 31, 2022 Аpri 30, 2022 August 31, 2022 $1,050,000 630,000 710,000 610,000 315,000 630,000 990,000 On January 1, 2021, the company obtained a $3 million construction loan with a 12% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company's other interest- bearing debt included two long-term notes of $4,100,000 and $6,100,000 with interest rates of 5% and 7%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company's fiscal year-end is December 31. Required: 1. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the weighted-average method. 2. What is the total cost of the building? 3. Calculate the amount of interest expense that will appear in the 2021 and 2022 income statements. 2021 2022 Interest capitalized Interest expense Total cost of building
Transcribed Image Text:On January 1, 2021, the company obtained a $3 million loan with a 12% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as +follows: се. January 1, 2021 March 1, 2021 June 30, 2021 October 1, 2021 January 31, 2022 Аpri 30, 2022 August 31, 2022 $1,050,000 630,000 710,000 610,000 315,000 630,000 990,000 On January 1, 2021, the company obtained a $3 million construction loan with a 12% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company's other interest- bearing debt included two long-term notes of $4,100,000 and $6,100,000 with interest rates of 5% and 7%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company's fiscal year-end is December 31. Required: 1. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the weighted-average method. 2. What is the total cost of the building? 3. Calculate the amount of interest expense that will appear in the 2021 and 2022 income statements. 2021 2022 Interest capitalized Interest expense Total cost of building
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