On January 1, 2024, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2025. Expenditures on the project were as follows:January 1, 2024$ 1,000,000March 1, 2024840,000June 30, 2024480,000October 1, 2024680,000January 31, 2025630,000April 30, 2025945,000August 31, 20251,620,000On January 1, 2024, the company obtained a $3 million construction loan with a 11% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2024 and 2025. The company’s other interest-bearing debt included two long-term notes of $4,800,000 and $6,800,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during all of 2024 and 2025. Interest is paid annually on all debt. The company’s fiscal year-end is December 31.Required:Using the weighted-average interest method, answer the following questions:Calculate the amount of interest that Mason should capitalize in 2024 and 2025 using the weighted-average method.What is the total cost of the building?Calculate the amount of interest expense that will appear in the 2024 and 2025 income statements. On January 1, 2024, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. Thebuilding was completed on September 30, 2025. Expenditures on the project were as follows:January 1, 2024March 1, 2024June 30, 2024October 1, 2024January 31, 2025April 30, 2025August 31, 2025$ 1,000,000840,000480,000680,000630,000945,0001,620,000On January 1, 2024, the company obtained a $3 million construction loan with a 11% interest rate. Assume the $3 million loan is notspecifically tied to construction of the building. The loan was outstanding all of 2024 and 2025. The company's other interest-bearingdebt included two long-term notes of $4,800,000 and $6,800,000 with interest rates of 8% and 10%, respectively. Both notes wereoutstanding during all of 2024 and 2025. Interest is paid annually on all debt. The company's fiscal year-end is December 31.Required:Using the weighted-average interest method, answer the following questions:1. Calculate the amount of interest that Mason should capitalize in 2024 and 2025 using the weighted-average method.2. What is the total cost of the building?3. Calculate the amount of interest expense that will appear in the 2024 and 2025 income statements.Complete this question by entering your answers in the tabs below.Req 1 and 3Req 21. Calculate the amount of interest that Mason should capitalize in 2024 and 2025 using the weighted-average method.3. Calculate the amount of interest expense that will appear in the 2024 and 2025 income statements.Note: Round "Weighted-average rate of all debt" to 2 decimal places but do not round other intermediate calculations. Enteryour answers in dollars rounded to the nearest whole number.

Weighted average accumulated expenditure = Amount of expense * Capitalization periodTotal cost of…

On January 1, 2024, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2025. Expenditures on the project were as follows: January 1, 2024 $ 1,000,000 March 1, 2024 840,000 June 30, 2024 480,000 October 1, 2024 680,000 January 31, 2025 630,000 April 30, 2025 945,000 August 31, 2025 1,620,000 On January 1, 2024, the company obtained a $3 million construction loan with a 11% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2024 and 2025. The company’s other interest-bearing debt included two long-term notes of $4,800,000 and $6,800,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during all of 2024 and 2025. Interest is paid annually on all debt. The company’s fiscal year-end is December 31. Required: Using the weighted-average interest method, answer the following questions: Calculate the amount of interest that Mason should capitalize in 2024 and 2025 using the weighted-average method. What is the total cost of the building? Calculate the amount of interest expense that will appear in the 2024 and 2025 income statements.

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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January 1, 2024	$ 1,000,000
March 1, 2024	840,000
June 30, 2024	480,000
October 1, 2024	680,000
January 31, 2025	630,000
April 30, 2025	945,000
August 31, 2025	1,620,000

Required:

Using the weighted-average interest method, answer the following questions:

Calculate the amount of interest that Mason should capitalize in 2024 and 2025 using the weighted-average method.
What is the total cost of the building?
Calculate the amount of interest expense that will appear in the 2024 and 2025 income statements.

On January 1, 2024, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The
building was completed on September 30, 2025. Expenditures on the project were as follows:
January 1, 2024
March 1, 2024
June 30, 2024
October 1, 2024
January 31, 2025
April 30, 2025
August 31, 2025
$ 1,000,000
840,000
480,000
680,000
630,000
945,000
1,620,000
On January 1, 2024, the company obtained a $3 million construction loan with a 11% interest rate. Assume the $3 million loan is not
specifically tied to construction of the building. The loan was outstanding all of 2024 and 2025. The company's other interest-bearing
debt included two long-term notes of $4,800,000 and $6,800,000 with interest rates of 8% and 10%, respectively. Both notes were
outstanding during all of 2024 and 2025. Interest is paid annually on all debt. The company's fiscal year-end is December 31.
Required:
Using the weighted-average interest method, answer the following questions:
1. Calculate the amount of interest that Mason should capitalize in 2024 and 2025 using the weighted-average method.
2. What is the total cost of the building?
3. Calculate the amount of interest expense that will appear in the 2024 and 2025 income statements.
Complete this question by entering your answers in the tabs below.
Req 1 and 3
Req 2
1. Calculate the amount of interest that Mason should capitalize in 2024 and 2025 using the weighted-average method.
3. Calculate the amount of interest expense that will appear in the 2024 and 2025 income statements.
Note: Round "Weighted-average rate of all debt" to 2 decimal places but do not round other intermediate calculations. Enter
your answers in dollars rounded to the nearest whole number.

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