On December 21, 2013, Jumble Inc. borrowed $1,000,000 at 10% payable annually to finance the construction of a new building. In 2014, the company made the following expenditures realated to this building. Jun-1 $400,000 July-1 $600,000 Sep-1 $1,200,000 Dec-1 $600,000 The building was completed in April 2015. Additional information is provided as follows: 1) other debt outstanding: 10-year, 8% bond dated December 31,2012, interest payable annually $10,000,000 15-year, 10% note, dated December 31, 2012, interest payable annually $2,500,000 2) Interest revenue earned in 2014 $6,000 INSTRUCTIONS: A) Determine the amount of interest to be capitalized in 2014 in relation to the construction of the building B) Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31, 2014
On December 21, 2013, Jumble Inc. borrowed $1,000,000 at 10% payable annually to finance the construction of a new building. In 2014, the company made the following expenditures realated to this building.
Jun-1 $400,000
July-1 $600,000
Sep-1 $1,200,000
Dec-1 $600,000
The building was completed in April 2015. Additional information is provided as follows:
1) other debt outstanding:
10-year, 8% bond dated December 31,2012, interest payable annually $10,000,000
15-year, 10% note, dated December 31, 2012, interest payable annually $2,500,000
2) Interest revenue earned in 2014 $6,000
INSTRUCTIONS:
A) Determine the amount of interest to be capitalized in 2014 in relation to the construction of the building
B) Prepare the
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