On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The company borrowed $1,500,000 at 8% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021: 12% bonds Long-term note, 8% Required: Construction expenditures incurred during 2021 were as follows: January 1 March 31 June 30 September 30 December 1 $600,000 $1,200,000 $800,000 $600,000 $300,000 5,000,000 3,000,000 Calculate the amount of interest capitalized for 2021 using the specific interest method. (Do not round the intermediate calculations. Round your percentage answers to 1 decimal place.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was
completed in 2022. The company borrowed $1,500,000 at 8% on January 1 to help finance the construction. In addition to the construction
loan, Highlands had the following debt outstanding throughout 2021:
B
4
12% bonds
Long-term note, 8%
Required:
Construction expenditures incurred during 2021 were as follows:
January 1
March 31
June 30
September 30
December 1
$600,000
$1,200,000
$800,000
$600.000
$300,000
Calculate the amount of interest capitalized for 2021 using the specific interest method.
(Do not round the intermediate calculations. Round your percentage answers to 1 decimal place.)
Expenditure
Average
Date
January 1
March 31
June 30
September 30
December 1
Avg. accumulated expenditures
5,000,000
3,000,000
Average accumulated expenditures
X X X X X
Amount
Weight
X
X
IIII||
Interest
Rate
P
Capitalized
Interest
Transcribed Image Text:On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The company borrowed $1,500,000 at 8% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021: B 4 12% bonds Long-term note, 8% Required: Construction expenditures incurred during 2021 were as follows: January 1 March 31 June 30 September 30 December 1 $600,000 $1,200,000 $800,000 $600.000 $300,000 Calculate the amount of interest capitalized for 2021 using the specific interest method. (Do not round the intermediate calculations. Round your percentage answers to 1 decimal place.) Expenditure Average Date January 1 March 31 June 30 September 30 December 1 Avg. accumulated expenditures 5,000,000 3,000,000 Average accumulated expenditures X X X X X Amount Weight X X IIII|| Interest Rate P Capitalized Interest
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