On July 31, 2020, Whispering Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction begun immediately and was completed or November 1, 2020. To help finance construction, on July 31 Whispering issued a $320,400, 3-year, 12% note payable at Netherlands National Bank, on which interest is payable each July 31.$211,400 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, Whispering made a final $109,000 payment to Minsk. Other than the note to Netherlands, Whispering's only outstanding liability at December 31, 2020, is a $31,100, 8 % , 6-year note payable, dated January 1, 2017, on which interest is payable each December 31. Your answer is correct. Calculate the interest revenue, weighted-average accumulated expenditures, avoidable interest, and total interest cost to be capitalized during 2020. $ Interest revenue 2725 Weighted-average accumulated expenditures $ 52,850 Avoidable interest 6,342 Interest capitalized 6,342 Prepare the journal entries needed on the books of Whispering Company at each of the following dates. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts,) (1) July 31, 2020. (2) November 1, 2020. December 31, 2020. (3) Account Titles and Explanation Debit Date Credit 3,20,400 7/31 Cash Notes Payable 3,20,400 (To record the note.) Machinery 2.11.400 1,09,000 3,20.400 (To record the payment to Minsk) 11/1 1,09,000 Machinery Cash 1,09,000 To record the payment to Minsk.) 12/31 Machinery 6.342 Interest Expense 12,326 Cash 2,648 Interest Payable 16,020
On July 31, 2020, Whispering Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction begun immediately and was completed or November 1, 2020. To help finance construction, on July 31 Whispering issued a $320,400, 3-year, 12% note payable at Netherlands National Bank, on which interest is payable each July 31.$211,400 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, Whispering made a final $109,000 payment to Minsk. Other than the note to Netherlands, Whispering's only outstanding liability at December 31, 2020, is a $31,100, 8 % , 6-year note payable, dated January 1, 2017, on which interest is payable each December 31. Your answer is correct. Calculate the interest revenue, weighted-average accumulated expenditures, avoidable interest, and total interest cost to be capitalized during 2020. $ Interest revenue 2725 Weighted-average accumulated expenditures $ 52,850 Avoidable interest 6,342 Interest capitalized 6,342 Prepare the journal entries needed on the books of Whispering Company at each of the following dates. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts,) (1) July 31, 2020. (2) November 1, 2020. December 31, 2020. (3) Account Titles and Explanation Debit Date Credit 3,20,400 7/31 Cash Notes Payable 3,20,400 (To record the note.) Machinery 2.11.400 1,09,000 3,20.400 (To record the payment to Minsk) 11/1 1,09,000 Machinery Cash 1,09,000 To record the payment to Minsk.) 12/31 Machinery 6.342 Interest Expense 12,326 Cash 2,648 Interest Payable 16,020
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On July 31, 2020, Whispering Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction begun immediately and was completed or
November 1, 2020. To help finance construction, on July 31 Whispering issued a $320,400, 3-year, 12% note payable at Netherlands National Bank, on which interest is payable each July
31.$211,400 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, Whispering made a final $109,000 payment to Minsk. Other than the note to Netherlands, Whispering's only outstanding liability at December
31, 2020, is a $31,100, 8 % , 6-year note payable, dated January 1, 2017, on which interest is payable each December 31.
Your answer is correct.
Calculate the interest revenue, weighted-average accumulated expenditures, avoidable interest, and total interest cost to be capitalized during 2020.
$
Interest revenue
2725
Weighted-average accumulated expenditures
$
52,850
Avoidable interest
6,342
Interest capitalized
6,342
Transcribed Image Text:Prepare the journal entries needed on the books of Whispering Company at each of the following dates. (Credit account titles are automatically indented when amount is entered. Do not
indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts,)
(1)
July 31, 2020.
(2)
November 1, 2020.
December 31, 2020.
(3)
Account Titles and Explanation
Debit
Date
Credit
3,20,400
7/31
Cash
Notes Payable
3,20,400
(To record the note.)
Machinery
2.11.400
1,09,000
3,20.400
(To record the payment to Minsk)
11/1
1,09,000
Machinery
Cash
1,09,000
To record the payment to Minsk.)
12/31
Machinery
6.342
Interest Expense
12,326
Cash
2,648
Interest Payable
16,020
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