On June 1, 2022, Sun Construction began construction of a new building for its use. The building was finished and ready for use on May 31, 2024. Expenditures for the construction were as follows: Cost of land paid in June 1, 2022 $1,800,000 September 1/2022 600,000 December 31, 2022 800,000 march 31, 2023 395,000 May 31,2023 375,000 November 1,2023 562,500 January 31,2024 37,806 May31, 2024 567983 Sun Construction borrowed $700,000 on a construction loan at 5% interest on June 1,2022 This loan was outstanding during the construction period. The company also had the following outstanding loan during the period: $7,000,000, 7. % bonds $5,000,000, 4% mortgage. Required 1-Compute the amount of capitalize interest, if any from first day of the project until its ready to use? 2-Journalize the entries in May 31/2024 and calculate the building total cost. 3- Journalize the depreciation in 31/12/2024 assuming the company use straight line method for depreciation with 50 years' useful life and no salvage value

On June 1, 2022, Sun Construction began construction of a new building for its use. The building was finished and ready for use on May 31, 2024. Expenditures for the construction were as follows: Cost of land paid in June 1, 2022 $1,800,000 September 1/2022 600,000 December 31, 2022 800,000 march 31, 2023 395,000 May 31,2023 375,000 November 1,2023 562,500 January 31,2024 37,806 May31, 2024 567983 Sun Construction borrowed $700,000 on a construction loan at 5% interest on June 1,2022 This loan was outstanding during the construction period. The company also had the following outstanding loan during the period: $7,000,000, 7. % bonds $5,000,000, 4% mortgage. Required 1-Compute the amount of capitalize interest, if any from first day of the project until its ready to use? 2-Journalize the entries in May 31/2024 and calculate the building total cost. 3- Journalize the depreciation in 31/12/2024 assuming the company use straight line method for depreciation with 50 years' useful life and no salvage value

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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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 $1,000,000 600,000 800,000 600,000 270,000 585,000 900,000 On January 1, 2024, the company obtained a $3 million construction loan with a 10% interest rate. The loan was outstanding all of 2024 and 2025. The company's other interest-bearing debt included two long-term notes of $4,000,000 and $6,000,000 with interest rates of 6% and 8%, 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. 4. Compute the cost to be allocated to the building in 2025 other than Capitalized Interest, Show your computation in the workpaper provided. 4. 1/31/2025 4/30/2025 8/31/2025…
5) In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: 2021 2022 2023 Cost incurred during the year $ 2,100,000 $ 2,450,000 $ 2,695,000 Estimated costs to complete as of year-end 4,900,000 2,450,000 0 Billings during the year 2,200,000 2,350,000 5,450,000 Cash collections during the year 1,900,000 2,300,000 5,800,000 Westgate recognizes revenue over time according to percentage of completion. 4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.) 2021 2022 2023 Costs incurred…
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Required information [The following information applies to the questions displayed below.] In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Information related to the contract is as follows: 2024 2025 2026 Cost incurred during the year Estimated costs to complete as of year-end Billings during the year $ 2,542,000 5,658,000 2,020,000 $ 3,772,000 1,886,000 4,294,000 $ 2,074,600 0 Cash collections during the year 1,810,000 3,800,000 3,686,000 4,390,000 Westgate recognizes revenue over time according to percentage of completion. 2-a. In the journal below, complete the necessary journal entries for the year 2024 (credit "Cash, Materials, etc." for construction costs incurred). 2-b. In the journal below, complete the necessary journal entries for the year 2025 (credit "Cash, Materials, etc." for construction costs incurred). 2-c. In the journal below, complete the necessary journal…
10) 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 600,000 June 30, 2024 800,000 October 1, 2024 600,000 January 31, 2025 270,000 April 30, 2025 585,000 August 31, 2025 900,000 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 $4,000,000 and $6,000,000 with interest rates of 6% and 8%, 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…
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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 On January 1, 2024, the company obtained a $3,900,000 construction loan with a 12% interest rate. The loan was outstanding all of 2024 and 2025. The company's other interest-bearing debt included two long-term notes of $6,000,000 and $9,000,000 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: 1. Calculate the amount of interest that Mason should capitalize in 2024 and 2025 using the specific interest method. 2. What is the total cost of the building? 3. Calculate the amount of interest expense that will appear in…
Required information [The following information applies to the questions displayed below.] In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Information related to the contract is as follows: 2024 Cost incurred during the year Estimated costs to complete as of year-end $ 2,400,000 5,600,000 2,000,000 Billings during the year Cash collections during the year 1,800,000 Westgate recognizes revenue over time according to percentage of completion. Balance Sheet (Partial) Current assets: Accounts receivable Construction in progress Add: Billings Current liabilities: Billings in excess of CIP 3. Complete the information required below to prepare a partial balance sheet for 2024 and 2025 showing any items related to the contract. Note: Do not round intermediate calculations. $ 2024 900,000 2,000,000 $4,285,714 (1,100,000) $ 2,070,000 0 2025 $ 3,600,000 2,000,000 4,000,000 3,600,000 2025…
McCombs Contractors received a contract to construct a mental health facility for $2,500,000. Construction was begun in 2023 and completed in 2024. Cost and other data are presented below 2023 Costs incurred during the year Estimated costs to complete Billings during the year Cash collections during the year $ 1,500,000 1,200,000 2024 $ 1,300,000 0 1,200,000 1,000,000 1,300,000 1,500,000 Assume that McCombs recognizes revenue on this contract over time according to percentage of completion. Required: Compute the amount of gross profit recognized during 2023 and 2024, Note: Loss amounts should be indicated with a minus sign. Amount of gross profit (or loss) recognized in 2023 Amount of gross profit (or loss) recognized in 2024