On December 31, 2020, Cheyenne Inc., a public company, borrowed $3 millionat 11% payable annually to finance the construction of a new building. In 2021, thecompany made the following expenditures related to this building structure (unlessotherwise noted): March 1, $519,000; June 1, $630,000; July 1, $1.5 million (ofwhich $412,000 was for the roof); December 1, $1.5 million (of which $728,000 wasfor the building HVAC).Additional information follows:1. Other debt outstanding:$5-million, 10-year, 12% bond, dated December 31, 2013, with interest payableannually$1.5-million, six-year, 10 % note, dated December 31, 2017, with interest payableannually2. The March 1, 2021 expenditure included land costs of $147,000.3. Interest revenue earned in 2021 on the unused idle construction loan amountedto $52,400.PART 2Prepare the journal entry to record the capitalization of borrowing costs and therecognition of interest expense, if any, at December 31, 2020. (Credit account titlesare automatically indented when the amount is entered. Do not indent manually. Ifno entry is required, select "No Entry" for the account titles and enter 0 for theamounts. Do not round intermediate calculations. Round capitalization rate to 2decimal places, e.g. 52.75% and final answers to 0 decimal places, e.g. 5,275.)

Name: On December 31, 2020, Cheyenne Inc., a public company, borrowed $3 mi
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Description: On December 31, 2020, Cheyenne Inc., a public company, borrowed $3 millionat 11% payable annually to finance the construction of a new building. In 2021, thecompany made the following expenditures related to this building structure (unlessotherwise

Capitalized cost refers to the borrowing cost that is required to construct a long-term asset.

Answered: Prepare the journal entry to record the…

Business

Accounting

Prepare the journal entry to record the capitalization of borrowing costs and the recognition of interest expense, if any, at December 31, 2020. (Credit account titles are automatic

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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