Novak Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $15,000,000 on January 1, 2025. Novak expected to complete the building by December 31, 2025. Novak has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2024 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2026 Long-term loan-11% interest, payable on January 1 of each year; principal payable on January 1, 2029 $6,000,000 4,500,000 3,000,000

Novak Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $15,000,000 on January 1, 2025. Novak expected to complete the building by December 31, 2025. Novak has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2024 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2026 Long-term loan-11% interest, payable on January 1 of each year; principal payable on January 1, 2029 $6,000,000 4,500,000 3,000,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 6P

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On January 1, 2018, King Inc. borrowed $150,000 and signed a 5-year, note payable with a 10% interest rate. Each annual payment is in the amount of $39,569 and payment is due each Dec. 31. What is the journal entry on Jan. 1 to record the cash received and on Dec. 31 to record the annual payment? (You will need to prepare the first row in the amortization table to determine the amounts.)
Saleh Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $2,500,000 on January 1, 2020. Saleh expected to complete the building by December 31, 2022. Saleh has the following debt obligations outstanding during the construction period. Construction loan – 15% interest, payable semiannually, issued December 31, 2021 $1,000,000 Short-term loan – 10% interest, payable monthly, and principal payable at maturity on May 30, 2022 700,000 Long-term loan – 11% interest, payable on January 1 of each year. Principal payable on January 1, 2026 500,000 Instructions (Carry all computations to two decimal places.) (a). Assume that Saleh completed the office and warehouse building on December 31, 2022, as planned, at a total cost of $2,600,000, and the weighted average of accumulated expenditures was $1,800,000. Compute the avoidable interest on this project. (b). Compute the depreciation expense for the year ended…
NovakFurniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $14,000,000 on January 1, 2020. Novak expected to complete the building by December 31, 2020. Novak has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2019 $5,600,000 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2021 4,200,000 Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2024 2,800,000 Assume that Novak completed the office and warehouse building on December 31, 2020, as planned at a total cost of $14,560,000, and the weighted-average amount of accumulated expenditures was $10,080,000. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final answers…
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