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On December 31, 2024, Vaughn Inc. borrowed $3,900,000 at 12% payable annually to finance the construction of a new building. In 2025, the company made the following expenditures related to this building: March 1, $468,000; June 1, $780,000, July 1, $1,950,000; December 1, $1,950,000. The building was completed in February 2026. Additional information is provided as follows. 1. Other debt outstanding: 10-year, 13% bond, December 31, 2018, interest payable annually 6-year, 10% note, dated December 31, 2022, interest payable annually March 1, 2025, expenditure included land costs of $195,000. 2 3. Interest revenue of $63,700 earned in 2025. $5,200,000 2,080,000

On December 31, 2024, Vaughn Inc. borrowed $3,900,000 at 12% payable annually to finance the construction of a new building. In 2025, the company made the following expenditures related to this building: March 1, $468,000; June 1, $780,000, July 1, $1,950,000; December 1, $1,950,000. The building was completed in February 2026. Additional information is provided as follows. 1. Other debt outstanding: 10-year, 13% bond, December 31, 2018, interest payable annually 6-year, 10% note, dated December 31, 2022, interest payable annually March 1, 2025, expenditure included land costs of $195,000. 2 3. Interest revenue of $63,700 earned in 2025. $5,200,000 2,080,000

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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On December 31, 2024, Vaughn Inc. borrowed $3,900,000 at 12% payable annually to finance the construction of a new building. In 2025, the company made the following expenditures related to this building: March 1, $468,000; June 1, $780,000, July 1, $1,950,000; December 1, $1,950,000. The building was completed in February 2026. Additional information is provided as follows. 1. Other debt outstanding: 10-year, 13% bond, December 31, 2018, interest payable annually 6-year, 10% note, dated December 31, 2022, interest payable annually March 1, 2025, expenditure included land costs of $195,000. 2. 3. Interest revenue of $63,700 earned in 2025, $5,200,000 2,080,000
Transcribed Image Text:On December 31, 2024, Vaughn Inc. borrowed $3,900,000 at 12% payable annually to finance the construction of a new building. In 2025, the company made the following expenditures related to this building: March 1, $468,000; June 1, $780,000, July 1, $1,950,000; December 1, $1,950,000. The building was completed in February 2026. Additional information is provided as follows. 1. Other debt outstanding: 10-year, 13% bond, December 31, 2018, interest payable annually 6-year, 10% note, dated December 31, 2022, interest payable annually March 1, 2025, expenditure included land costs of $195,000. 2. 3. Interest revenue of $63,700 earned in 2025, $5,200,000 2,080,000
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.) ite r 31, 2025 Account Titles and Explanation Interest Expense Debit Credit
Transcribed Image Text: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.) ite r 31, 2025 Account Titles and Explanation Interest Expense Debit Credit
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