On July 31, 2020, Marin Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction begun immediately and was completed on November 1, 2020. To help finance construction, on July 31 Marinissued a $270,000, 3-year, 12% note payable at Netherlands National Bank, on which interest is payable each July 31. $169,000 of the proceeds of the note was paid to Minsk on July 31. The remainder of the proceeds was temporarily invested in short-term marketable securities (trading securities) at 10% until November 1. On November 1, Marin made a final $101,000 payment to Minsk. Other than the note to Netherlands, Marin’s only outstanding liability at December 31, 2020, is a $30,100, 8%, 6-year note payable, dated January 1, 2017, on which interest is payable each December 31. (a) Calculate the interest revenue, weighted-average accumulated expenditures, avoidable interest, and total interest cost to be capitalized during 2020. Interest revenue $ Weighted-average accumulated expenditures $ Avoidable interest $ Interest capitalized $ List of Accounts
On July 31, 2020, Marin Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction begun immediately and was completed on November 1, 2020. To help finance construction, on July 31 Marinissued a $270,000, 3-year, 12% note payable at Netherlands National Bank, on which interest is payable each July 31. $169,000 of the proceeds of the note was paid to Minsk on July 31. The remainder of the proceeds was temporarily invested in short-term marketable securities (trading securities) at 10% until November 1. On November 1, Marin made a final $101,000 payment to Minsk. Other than the note to Netherlands, Marin’s only outstanding liability at December 31, 2020, is a $30,100, 8%, 6-year note payable, dated January 1, 2017, on which interest is payable each December 31. (a) Calculate the interest revenue, weighted-average accumulated expenditures, avoidable interest, and total interest cost to be capitalized during 2020. Interest revenue $ Weighted-average accumulated expenditures $ Avoidable interest $ Interest capitalized $ List of Accounts
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
On July 31, 2020, Marin Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction begun immediately and was completed on November 1, 2020. To help finance construction, on July 31 Marinissued a $270,000, 3-year, 12% note payable at Netherlands National Bank, on which interest is payable each July 31. $169,000 of the proceeds of the note was paid to Minsk on July 31. The remainder of the proceeds was temporarily invested in short-term marketable securities (trading securities) at 10% until November 1. On November 1, Marin made a final $101,000 payment to Minsk. Other than the note to Netherlands, Marin’s only outstanding liability at December 31, 2020, is a $30,100, 8%, 6-year note payable, dated January 1, 2017, on which interest is payable each December 31.
(a)
Calculate the interest revenue, weighted-average accumulated expenditures, avoidable interest, and total interest cost to be capitalized during 2020.
| Interest revenue |
$
|
|
| Weighted-average accumulated expenditures |
$
|
|
| Avoidable interest |
$
|
|
| Interest capitalized |
$
|
List of Accounts
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education