The following information is from Bowin Inc. for a long-term constructioproject that is expected to be completed in January 2021. Theconstruction project is for a building intended for the company's ownuse. Bowin Inc. borrowed $800,000 at 12% on January 1 to helpfinance the construction. All debt was outstanding for the full year.Capital Expenditures for 2020DateJan. 1, 2020Mar. 1, 2020June 30, 2020Dec. 31, 2020Amount$2,220,720300,000500,000500,000Outstanding Debt in 2020AssetDebtNote payableNote payableBond payableNote payableConstruction loanDebt Amount Interest Rate$1,000,000600,000150,000600,000800,00013%8%10%12%12%The weighted-average accumulated expenditures in 2020 is $

Weighted-average accumulated expenditures is used to determine the weighted average of expenditures…

The following information is from Bowin Inc. for a long-term construct project that is expected to be completed in January 2021. The construction project is for a building intended for the company's own use. Bowin Inc. borrowed $800,000 at 12% on January 1 to help finance the construction. All debt was outstanding for the full year.

The following information is from Bowin Inc. for a long-term construct project that is expected to be completed in January 2021. The construction project is for a building intended for the company's own use. Bowin Inc. borrowed $800,000 at 12% on January 1 to help finance the construction. All debt was outstanding for the full year.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On 4/1/22, Little Inc. borrowed funds on a 9%, one-year note to finance the construction of a new building to be used for its own purposes. Construction on the project began on 5/1/22 and was completed on 9/1/22. Rounded to the nearest whole month, how many total months in 2022 should interest be capitalized under the interest capitalization rules? 0 months 4 months 5 months 8 months 9 months 12 months
On January 1, 2024, the Marjlee Company began construction of an office building to be used as its corporate headquarters. The building was completed early in 2025. Construction expenditures for 2024, which were incurred evenly throughout the year, totaled $9, 300, 000. Marjlee had the following debt obligations which were outstanding during all of 2024: Construction loan, 11% $ 2,325,000 Long-term note, 10% 3,100,000 Long-term note, 7% 6,200,000 Required: Calculate the amount of interest capitalized in 2024 for the building using the specific interest method.
Bonita Industries is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were $6440000 on March 1, $5260000 on June 1, and $8850000 on December 31. Bonita Industries borrowed $3190000 on January 1 on a 5-year, 11% note to help finance construction of the building. In addition, the company had outstanding all year a 9%, 3-year, $6440000 note payable and an 10%, 4-year, $12650000 note payable.What are the weighted-average accumulated expenditures? $9860000 $20550000 $8435000 $11700000
On December 31, 2019, Pronghorn Inc. borrowed $4,140,000 at 13% payable annually to finance the construction of a new building. In 2020, the company made the following expenditures related to this building: March 1, $496,800; June 1, $828,000; July 1, $2,070,000; December 1, $2,070,000. The building was completed in February 2021. Additional information is provided as follows. 1. Other debt outstanding 10-year, 14% bond, December 31, 2013, interest payable annually $5,520,000 6-year, 11% note, dated December 31, 2017, interest payable annually $2,208,000 2. March 1, 2020, expenditure included land costs of $207,000 3. Interest revenue earned in 2020 $67,620 (a) Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building. The amount of interest %24
On January 1 of the current year, a company began construction of an office building to be used as its corporate headquarters. The building was completed early in the following year Construction expenditures for the current year, which were incurred evenly throughout the year, totaled $6,900,000. The company had the following debt obligations which were outstanding during all of the current year Construction loan, 10% Long-term note, 9% Long-term note, 6% 4 $1,725,000 2,300,000 4,600,000 Required: Calculate the amount of interest capitalized in the current year for the building using the specific interest method. terest capitalized
Vaughn Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,968,000 on March 1, $1,248,000 on June 1, and $3,076,020 on December 31. Vaughn Company borrowed $1,145,430 on March 1 on a 5-year, 13% note to help finance construction of the building. In addition, the company had outstanding all year a 9%, 5-year, $2,433,900 note payable and an 10%, 4-year, $3,482,600 note payable. Compute the weighted-average interest rate used for interest capitalization purposes. (Round answer to 2 decimal places, e.g. 7.58%.) Weighted-average interest rate %
Grouper, Inc. has a fiscal year ending April 30. On May 1, 2020, Grouper borrowed $9,912,000 at 11% to finance construction of its own building. Repayments of the loan are to commence the month following completion of the building. During the year ended April 30, 2021, weighted-average accumulated expenditures were $3,469,200. Interest earned on the unexpended portion of the loan amounted to $644,280 for the year. How much should be shown as capitalized interest on Grouper's financial statements at April 30, 2021? Capitalized interest on Grouper's financial statements 190806
On December 31, 2024, Tamarisk Inc. borrowed $3,960,000 at 13% payable annually to finance the construction of a new building. In 2025, the company made the following expenditures related to this building: March 1, $475,200; June 1, $792,000; July 1, $1,980,000; December 1, $1,980,000. The building was completed in February 2026. Additional information is provided as follows. 1. 2. 3. (a) Other debt outstanding: 10-year, 14% bond, December 31, 2018, interest payable annually 6-year, 11% note, dated December 31, 2022, interest payable annually March 1, 2025, expenditure included land costs of $198,000. Interest revenue of $64,680 earned in 2025. Your answer is correct Determine the amount of interest to be capitalized in 2025 in relation to the construction of the building. The amount of interest $ eTextbook and Media Date Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31, 2025. (Credit account titles are…
Vania Magazines started construction of a warehouse building for its own use at an estimated cost of $5,000,000 on January 1, 2019, and completed the building on December 31, 2019. During the construction period, Vania has the following debt obligations outstanding. Construction loan—12% interest, payable semiannually, issued December 31, 2018 $2,000,000 Short-term loan—10% interest, payable monthly, and principal payable at maturity, on May 30, 2020 1,400,000 Long-term loan—11% interest, payable on January 1 of each year; principal payable on January 1, 2022 1,000,000 Total cost amounted to $5,200,000, and the weighted average of accumulated expenditures was $3,500,000.Jane Esplanade, the president of the company, has been shown the costs associated with this construction project and capitalized on the balance sheet. She is bothered by the “avoidable interest” included in the cost. She argues that, first, all the interest is unavoidable—no one lends money…
Pearl, Inc. has a fiscal year ending April 30. On May 1, 2020, Pearl borrowed $9,636,000 at 11% to finance construction of its own building. Repayments of the loan are to commence the month following completion of the building. During the year ended April 30, 2021, weighted- average accumulated expenditures were $3,372,600. Interest earned on the unexpended portion of the loan amounted to $626,340 for the year. How much should be shown as capitalized interest on Pearl's financial statements at April 30, 2021? Capitalized interest on Pearl's financial statements 2$
Headland Company is constructing a building Construction began on February 1 and was completed on December 31 . Expenditures were $2,076,000 on March 1,$1,224,000 on June 1 and $3,076,600 on December 31. Headland Company borrowed $1,155,090 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 9%,5-year, $2,376,900 note payable and an 10%,4-year, $3,397,000 note payable. Compute the weighted-average interest rate used for interest capitalization purposes. (Round answer to 2 decimal places, es. 7.58%.
Sweet Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $4,860,000 on March 1, $3,240,000 on June 1, and $8,100,000 on December 31. Sweet Company borrowed $2,700,000 on March 1 on a 5-year, 10% note to help finance construction of the building. In addition, the company had outstanding all year a 12%, 5-year, $5,400,000 note payable and an 11%, 4-year, $9,450,000 note payable. Compute avoidable interest for Sweet Company. Use the weighted-average interest rate for interest capitalization purposes. (Round "Welghted-average interest rate" to 4 decimal places, e.g. 0.2152 and final answer to O decimal places, e.g. 5,275.) Avoidable interest 2$