On December 31, 2019, Nash Inc. borrowed $3,600,000 at 13% payable annually to finance the construction of a new building. In 2020, the company made the following expenditures related to this building: March 1, $432,000; June 1, $720,000; July 1, $1,800,000; December 1, $1,800,000. The building was completed in February 2021. Additional information is provided as follows. 1. Other debt outstanding 10-year, 14% bond, December 31, 2013, interest payable annually $4,800,000 6-year, 11% note, dated December 31, 2017, interest payable annually $1,920,000 2. March 1, 202O, expenditure included land costs of $180,000 3. Interest revenue earned in 2020 $58,800 Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building. The amount of interest %24
On December 31, 2019, Nash Inc. borrowed $3,600,000 at 13% payable annually to finance the construction of a new building. In 2020, the company made the following expenditures related to this building: March 1, $432,000; June 1, $720,000; July 1, $1,800,000; December 1, $1,800,000. The building was completed in February 2021. Additional information is provided as follows. 1. Other debt outstanding 10-year, 14% bond, December 31, 2013, interest payable annually $4,800,000 6-year, 11% note, dated December 31, 2017, interest payable annually $1,920,000 2. March 1, 202O, expenditure included land costs of $180,000 3. Interest revenue earned in 2020 $58,800 Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building. The amount of interest %24
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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Question
![Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December
31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manualy. If no entry is required,
select "No Entry" for the account titles and enter O for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
December 31, 2020](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5e3cc97e-a77f-4ac5-9e71-fb8b01208b37%2Fbbb4c58a-d4c1-4313-946b-cf20201b1112%2Fwygsiw_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December
31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manualy. If no entry is required,
select "No Entry" for the account titles and enter O for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
December 31, 2020
![On December 31, 2019, Nash Inc. borrowed $3,600,000 at 13% payable annually to finance the construction of a new building. In
2020, the company made the following expenditures related to this building: March 1, $432,000; June 1, $720,000; July 1,
$1,800,000; December 1, $1,800,000. The building was completed in February 2021. Additional information is provided as follows.
1.
Other debt outstanding
10-year, 14% bond, December 31, 2013, interest payable annually
$4,800,000
6-year, 11% note, dated December 31, 2017, interest payable annually
$1,920,000
2.
March 1, 2020, expenditure included land costs of $180,000
3.
Interest revenue earned in 2020
$58,800
Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building.
The amount of interest
%24](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5e3cc97e-a77f-4ac5-9e71-fb8b01208b37%2Fbbb4c58a-d4c1-4313-946b-cf20201b1112%2F8odxdbi_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On December 31, 2019, Nash Inc. borrowed $3,600,000 at 13% payable annually to finance the construction of a new building. In
2020, the company made the following expenditures related to this building: March 1, $432,000; June 1, $720,000; July 1,
$1,800,000; December 1, $1,800,000. The building was completed in February 2021. Additional information is provided as follows.
1.
Other debt outstanding
10-year, 14% bond, December 31, 2013, interest payable annually
$4,800,000
6-year, 11% note, dated December 31, 2017, interest payable annually
$1,920,000
2.
March 1, 2020, expenditure included land costs of $180,000
3.
Interest revenue earned in 2020
$58,800
Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building.
The amount of interest
%24
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