P10.6 (LO 2) (Borrowing Costs) Cho Landscaping began construction of a new plant on December 1, 2022 (all amounts in thousands). On this date, the company purchased a parcel of land for ¥139,000 in cash. In addition, it paid ¥2,000 in surveying costs and ¥4,000 for a title insurance policy. An old dwelling on the premises was demolished at a cost of ¥3,000, with ¥1,000 being received from the sale of materials. Architectural plans were also formalized on December 1, 2022, when the architect was paid ¥30,00o. The necessary building permits costing ¥3,000 were obtained from the city and paid for on December 1 as well. The excavation work began during the first week in December with payments made to the contractor in 2023 as follows. Date of Payment Amount of Payment March 1 ¥240,000 Мay 1 330,000 July 1 60,000 The building was completed on July 1, 2023. To finance construction of this plant, Cho borrowed ¥600,000 from the bank on December 1, 2022. Cho had no other borrowings. The ¥600,00o was a 10-year loan bearing interest at 8%. Excess funds from the loan were invested during 2022 and earned ¥2,000. During 2023, the excess funds from the loan earned ¥1,000. Instructions

P10.6 (LO 2) (Borrowing Costs) Cho Landscaping began construction of a new plant on December 1, 2022 (all amounts in thousands). On this date, the company purchased a parcel of land for ¥139,000 in cash. In addition, it paid ¥2,000 in surveying costs and ¥4,000 for a title insurance policy. An old dwelling on the premises was demolished at a cost of ¥3,000, with ¥1,000 being received from the sale of materials. Architectural plans were also formalized on December 1, 2022, when the architect was paid ¥30,00o. The necessary building permits costing ¥3,000 were obtained from the city and paid for on December 1 as well. The excavation work began during the first week in December with payments made to the contractor in 2023 as follows. Date of Payment Amount of Payment March 1 ¥240,000 Мay 1 330,000 July 1 60,000 The building was completed on July 1, 2023. To finance construction of this plant, Cho borrowed ¥600,000 from the bank on December 1, 2022. Cho had no other borrowings. The ¥600,00o was a 10-year loan bearing interest at 8%. Excess funds from the loan were invested during 2022 and earned ¥2,000. During 2023, the excess funds from the loan earned ¥1,000. Instructions

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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