The following information is from Bowin Inc. for a long-term construction project that is expected to be completed in January of next year. The construction project is for a building intended for the company's own use. The capital expenditure on January 1 of the current year is for the purchase of land for the building site. No new construction loans were opened for the project during the year. All debt was outstanding for the full year. Capital Expenditures for Current Year Actual Expenditures Date Jan. 1 Mar. 31 June 30 Nov. 30 $72,000 2,160,000 4,320,000 2,160,000 Debt Outstanding Debt in Current Year Debt Amount Interest Rate Note payable $2,400,000 8% Note payable 1,920,000 8% Bond payable 4,800,000 10% Note payable 1,200,000 9% Compute Interest to Capitalize and Expense Journal Entry in Year 1 Journal Entries in Year 2 a. Compute (1) interest to be capitalized and (2) interest to be expensed, during the year. Debt Calculation of Actual Interest Debt Amount Interest rate Interest Amount Specific Debt Construction loan 0% General Debt Note payable $ 0 x 0% x $ 0 * Note payable 0 * 0% * 0 * Bond payable 0 x 0% * 0 x Note payable Total 0 x 0% * 0 * 0 Calculation of Weighted Average Accumulated Expenditures Expenditures Months Outstanding WA Accum. Expenditures Date January 1 March 31 June 30 0 х 0 x $ 0 % 0 x 0 x 0 % November 30 0 x 0 x Total $ 0 x 0 x 0 x 0 % 0 Calculation of annual interest rate used in the schedule that follows General Debt $ Numerator + Denominator = 0x + $ 0x = Interest Rate %6 Calculation of Avoidable Interest Weighted Average
The following information is from Bowin Inc. for a long-term construction project that is expected to be completed in January of next year. The construction project is for a building intended for the company's own use. The capital expenditure on January 1 of the current year is for the purchase of land for the building site. No new construction loans were opened for the project during the year. All debt was outstanding for the full year. Capital Expenditures for Current Year Actual Expenditures Date Jan. 1 Mar. 31 June 30 Nov. 30 $72,000 2,160,000 4,320,000 2,160,000 Debt Outstanding Debt in Current Year Debt Amount Interest Rate Note payable $2,400,000 8% Note payable 1,920,000 8% Bond payable 4,800,000 10% Note payable 1,200,000 9% Compute Interest to Capitalize and Expense Journal Entry in Year 1 Journal Entries in Year 2 a. Compute (1) interest to be capitalized and (2) interest to be expensed, during the year. Debt Calculation of Actual Interest Debt Amount Interest rate Interest Amount Specific Debt Construction loan 0% General Debt Note payable $ 0 x 0% x $ 0 * Note payable 0 * 0% * 0 * Bond payable 0 x 0% * 0 x Note payable Total 0 x 0% * 0 * 0 Calculation of Weighted Average Accumulated Expenditures Expenditures Months Outstanding WA Accum. Expenditures Date January 1 March 31 June 30 0 х 0 x $ 0 % 0 x 0 x 0 % November 30 0 x 0 x Total $ 0 x 0 x 0 x 0 % 0 Calculation of annual interest rate used in the schedule that follows General Debt $ Numerator + Denominator = 0x + $ 0x = Interest Rate %6 Calculation of Avoidable Interest Weighted Average
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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please excel form answer.
Transcribed Image Text:The following information is from Bowin Inc. for a long-term construction project that is expected to be completed in
January of next year. The construction project is for a building intended for the company's own use. The capital
expenditure on January 1 of the current year is for the purchase of land for the building site. No new construction
loans were opened for the project during the year. All debt was outstanding for the full year.
Capital Expenditures for Current Year
Actual Expenditures
Date
Jan. 1
Mar. 31
June 30
Nov. 30
$72,000
2,160,000
4,320,000
2,160,000
Debt
Outstanding Debt in Current Year
Debt Amount Interest Rate
Note payable
$2,400,000
8%
Note payable
1,920,000
8%
Bond payable
4,800,000
10%
Note payable
1,200,000
9%
Compute Interest to Capitalize and Expense
Journal Entry in Year 1
Journal Entries in Year 2
a. Compute (1) interest to be capitalized and (2) interest to be expensed, during the year.
Debt
Calculation of Actual Interest
Debt Amount Interest rate
Interest Amount
Specific Debt
Construction loan
0%
General Debt
Note payable
$
0 x
0% x $
0 *
Note payable
0 *
0% *
0 *
Bond payable
0 x
0% *
0 x
Note payable
Total
0 x
0% *
0 *
0
Calculation of Weighted Average Accumulated Expenditures
Expenditures Months Outstanding WA Accum. Expenditures
Date
January 1
March 31
June 30
0 х
0 x $
0 %
0 x
0 x
0 %
November 30
0 x
0 x
Total
$
0 x
0 x
0 x
0 %
0
Calculation of annual interest rate used in the schedule that follows
General Debt $
Numerator + Denominator =
0x + $
0x =
Interest Rate
%6
Calculation of Avoidable Interest
Weighted Average
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