On January 1, 2017, Sheena Company borrowed 2,800,000 at an interest rate of 12% specifically for the construction of a new building. The actual interest cost on this specific borrowing was 336,000 but interest of 14,000 was earned from the temporary investment of the borrowing proceeds. Sheena company also had the following other loans in 2017 for general purposes but the proceeds were used in part for the construction of the building. Principal Interest 10% bank loan 4,200,000 420,000 12% long term loan 7,000,000 840,000 The construction began on January 1, 2017 and was completed on December 31, 2017. The expenditures on the construction were 2,800,000 on Jan. 1, 1,400,000 on March 31 and 4,200,000 on Sept.30. Required: Compute the cost of the new building.
On January 1, 2017, Sheena Company borrowed 2,800,000 at an interest rate of 12%
specifically for the construction of a new building.
The actual interest cost on this specific borrowing was 336,000 but interest of 14,000
was earned from the temporary investment of the borrowing proceeds.
Sheena company also had the following other loans in 2017 for general purposes but
the proceeds were used in part for the construction of the building.
Principal Interest
10% bank loan 4,200,000 420,000
12% long term loan 7,000,000 840,000
The construction began on January 1, 2017 and was completed on December 31,
2017. The expenditures on the construction were 2,800,000 on Jan. 1, 1,400,000 on
March 31 and 4,200,000 on Sept.30.
Required: Compute the cost of the new building.
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