On December 31, 2024, Splish Inc. borrowed $4,440,000 at 13% payable annually to finance the construction of a new building. In 2025, the company made the following expenditures related to this building: March 1, $532,800; June 1, $888,000; July 1, $2,220,000; December 1, $2,220,000. The building was completed in February 2026. Additional information is provided as follows. 1. Other debt outstanding: 10-year, 14% bond, December 31, 2018, interest payable annually $5,920,000 6-year, 11% note, dated December 31, 2022, interest payable annually 2,368,000 2. March 1, 2025, expenditure included land costs of $222,000. 3. Interest revenue of $72,520 earned in 2025. (a) (b) Your answer is partially correct. Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31, 2025. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)
On December 31, 2024, Splish Inc. borrowed $4,440,000 at 13% payable annually to finance the construction of a new building. In 2025, the company made the following expenditures related to this building: March 1, $532,800; June 1, $888,000; July 1, $2,220,000; December 1, $2,220,000. The building was completed in February 2026. Additional information is provided as follows. 1. Other debt outstanding: 10-year, 14% bond, December 31, 2018, interest payable annually $5,920,000 6-year, 11% note, dated December 31, 2022, interest payable annually 2,368,000 2. March 1, 2025, expenditure included land costs of $222,000. 3. Interest revenue of $72,520 earned in 2025. (a) (b) Your answer is partially correct. Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31, 2025. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:On December 31, 2024, Splish Inc. borrowed $4,440,000 at 13% payable annually to finance the construction of a new building. In
2025, the company made the following expenditures related to this building: March 1, $532,800; June 1, $888,000; July 1,
$2,220,000; December 1, $2,220,000. The building was completed in February 2026. Additional information is provided as follows.
1.
Other debt outstanding:
10-year, 14% bond, December 31, 2018, interest payable annually
$5,920,000
6-year, 11% note, dated December 31, 2022, interest payable annually
2,368,000
2.
March 1, 2025, expenditure included land costs of $222,000.
3.
Interest revenue of $72,520 earned in 2025.
(a)
(b)
Your answer is partially correct.
Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31,
2025. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No
Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education