Tamarisk Furniture started construction of a combination office and warehouse building for its own use at an estimated cost of €4,420,000 on January 1, 2022. Tamarisk expected to complete the building by December 31, 2022. Tamarisk has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2021 €1810,000 Short-termloan-10% interest, payable monthly, and principal payable at maturity on May 30, 2023 1,448,000 Long-term loan-119% interest, payable on January 1 of each year. Principal payable on January 1, 2026 905,000 (a) Assume that Tamarisk completed the office and warehouse building on December 31, 2022, as planned at a total cost of €4,706,000. The following expenditures were made during the period forthis project January 1, €905,000; April 1, €1,305,000; July 1, €1,705,000; and October 1, €560,000. Excess funds from the construction loans were invested during the period and earned €20,200 of investment income. Compute the amount of borrowing costs to be capitalized for this project (Use interest rates rounded to 2 decimal places, eg. 7.58% for computational purposes and round final answers to 0 decimal places, eg. 5,275.) Borrowing costs €
Tamarisk Furniture started construction of a combination office and warehouse building for its own use at an estimated cost of €4,420,000 on January 1, 2022. Tamarisk expected to complete the building by December 31, 2022. Tamarisk has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2021 €1810,000 Short-termloan-10% interest, payable monthly, and principal payable at maturity on May 30, 2023 1,448,000 Long-term loan-119% interest, payable on January 1 of each year. Principal payable on January 1, 2026 905,000 (a) Assume that Tamarisk completed the office and warehouse building on December 31, 2022, as planned at a total cost of €4,706,000. The following expenditures were made during the period forthis project January 1, €905,000; April 1, €1,305,000; July 1, €1,705,000; and October 1, €560,000. Excess funds from the construction loans were invested during the period and earned €20,200 of investment income. Compute the amount of borrowing costs to be capitalized for this project (Use interest rates rounded to 2 decimal places, eg. 7.58% for computational purposes and round final answers to 0 decimal places, eg. 5,275.) Borrowing costs €
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Tamarisk Furniture started construction of a combination office and warehouse building for its own use at an estimated cost of
€4,420,000 on January 1, 2022. Tamarisk expected to complete the building by December 31, 2022. Tamarisk has the following debt
obligations outstanding during the construction period.
Construction loan-12% interest, payable semiannually, issued December 31, 2021
€1,810,000
Short-termloan-10% interest, payable monthly, and principal payable at maturity on May 30, 2023
1,448,000
Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2026
905,000
(a)
Assume that Tamarisk completed the office and warehouse building on December 31, 2022, as planned at a total cost of
€4,706,000. The following expenditures were made during the period forthis project: January 1, €905,000; April 1, €1,305,000;
July 1, €1,705,000; and October 1, €560,000. Excess funds from the construction loans were invested during the period and
earned €20,200 of investment income. Compute the amount of borrowing costs to be capitalized for this project (Use interest
rates rounded to 2 decimal places, eg. 7.58% for computational purposes and round final answers to O decimal places, eg. 5,275.)
Borrowing costs
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