PAP-4A Westphal Construction sold to Walker Management Company apartments it had con- structed. The sales price was $2.5 million. Westphal's cost to construct the apartments was $1.6 million. Westphal appropriately uses the installment method. Additional information follows. 2011 2012 2013 Cash Collected $ 800,000 1,200,000 500,000 (a) Determine the gross profit for each year using the installment method. (b) Repeat (a) assuming the construction costs were $1.75 million.

PAP-4A Westphal Construction sold to Walker Management Company apartments it had con- structed. The sales price was $2.5 million. Westphal's cost to construct the apartments was $1.6 million. Westphal appropriately uses the installment method. Additional information follows. 2011 2012 2013 Cash Collected $ 800,000 1,200,000 500,000 (a) Determine the gross profit for each year using the installment method. (b) Repeat (a) assuming the construction costs were $1.75 million.

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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Interest During Construction Dexter Construction Corporation is building a student condominium complex; it started construction on January 1, Year 1. Dexter borrowed $1 million specifically for the project by issuing a 10%, 5-year, $1 million note, which is payable on December 31 of Year 3. Dexter also had a 12%, 5-year, $3 million note payable and a 10%, 10-year, $1.8 million note payable outstanding all year. In Year 1, Dexter incurred costs as follows: January 1 $260,000 March 1 540,000 June 30 1,000,000 November 1 420,000 Calculate Dexter's capitalized interest on the student condominium complex for Year 1. Capitalized interest =
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