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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 $1,250,000 690,000 430,000 630,000 405,000 720,000 1,170,000

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 $1,250,000 690,000 430,000 630,000 405,000 720,000 1,170,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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, 2824 October 1, 2024 January 31, 2025 April 30, 2025 August 31, 2025 $1,250,000 690,000 430,000 630,000 405,000 720,000 1,170,000 On January 1, 2024, the company obtained a $3 million construction loan with a 10% 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 $4,300,000 and $6,300,000 with interest rates of 4% and 9%, 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. Dan 1 and 3 *** steid
Transcribed Image Text: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, 2824 October 1, 2024 January 31, 2025 April 30, 2025 August 31, 2025 $1,250,000 690,000 430,000 630,000 405,000 720,000 1,170,000 On January 1, 2024, the company obtained a $3 million construction loan with a 10% 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 $4,300,000 and $6,300,000 with interest rates of 4% and 9%, 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. Dan 1 and 3 *** steid
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