The following information is provided for Rodgers Inc. for a long-term construction project that is expected to be completed in the second quarter of 2021. The project is an addition to an existing stadium, which is a qualifying asset.**Capital Expenditures for 2020:**| Date | Amount ||-------------|-----------|| Jan. 1, 2020 | $900,000 || Mar. 31, 2020 | $300,000 || June 30, 2020 | $500,000 || Dec. 31, 2020 | $500,000 |**Outstanding Debt in 2020:**| Debt | Issuance Date | Debt Amount | Interest Rate ||-------------------|---------------|-------------|---------------|| Construction loan | 1-Jan-20 | $800,000 | 12% || Note payable | 1-Mar-19 | $600,000 | 12% || Bond payable | 1-Jan-15 | $150,000 | 8% |Assume that Rodgers Inc. applies the weighted average method to capitalize interest.**Required:**1. The weighted average accumulated expenditures (AAE) for 2020 is $______. Round to the nearest dollar.2. The amount of interest that actually incurred in 2020 is $______. Round to the nearest dollar.3. The amount of interest to be capitalized in 2020 is $______. Round to the nearest dollar. **Construction Expenditures in 2020**- **Jan. 1, 2020**: $900,000- **Mar. 31, 2020**: $300,000- **June 30, 2020**: $500,000- **Dec. 31, 2020**: $500,000**Outstanding Debt in 2020**| Debt | Issuance Date | Debt Amount | Interest Rate ||--------------------|---------------|-------------|---------------|| Construction loan | 1-Jan-20 | $800,000 | 12% || Note payable | 1-Mar-19 | $600,000 | 12% || Bond payable | 1-Jan-15 | $150,000 | 8% |Assume that Rodgers Inc. applies the weighted average method to capitalize interest.**Required:**1. The weighted average accumulated expenditures (AAE) for 2020 is $______. Round to the nearest dollar.2. The amount of interest that actually incurred in 2020 is $______. Round to the nearest dollar.3. The amount of interest to be capitalized in 2020 is $______. Round to the nearest dollar.4. The amount of interest to be expensed in 2020 is $______. Round to the nearest dollar.

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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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In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: 2021 2022 2023 Cost incurred during the year $ 2,640,000 $ 2,300,000 $ 2,926,000 Estimated costs to complete as of year-end 6,160,000 2,660,000 0 Billings during the year 2,080,000 2,860,000 5,060,000 Cash collections during the year 1,840,000 2,800,000 5,360,000 Westgate recognizes revenue over time according to percentage of completion. 3. Complete the information required below to prepare a partial balance sheet for 2021 and 2022 showing any items related to the contract. (Do not round intermediate calculations.)
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In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: 2021 2022 2023 Cost incurred during the year $ 2,100,000 $ 2,450,000 $ 2,695,000 Estimated costs to complete as of year-end 4,900,000 2,450,000 0 Billings during the year 2,200,000 2,350,000 5,450,000 Cash collections during the year 1,900,000 2,300,000 5,800,000 Westgate recognizes revenue over time according to percentage of completion. 5. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.) 2021 2022 2023 Costs incurred…
In 2021, the Kokosing Construction Company of Columbus, Ohio entered into a contract to construct a road for Franklin County for $20,000,000. The road was completed in 2023. Information pertaining to the contract is provided below: 2021 2022 2023 Costs incurred during the year Estimated costs to complete as of year end Billings during the year Cash Collections during the year $4,800,000 $7,200,000 $4,400,000 11,200,000 4,000,000 4,000,000 8,000,000 8,000,000 3,600,000 7,200,000 9,200,000 Kokosing recognizes revenue over time according to percentage of completion. Required: 1. Compute the amount of revenue and gross profit to be recognized in 2021, 2022, and 2023. 2. Prepare the necessary journal entries for 2021 and 2022. Use the following accounts for your journal entries - "Construction in Progress", "Cash, Materials etc.", "Accounts Receivable", "Billings on Construction in Progress", "Cash", "Cost of Construction", and "Revenue from Long-term contracts". 3. Prepare a partial…
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In early February 2020, Bridgeport Corp. began construction of an addition to its head office building that is expected to take 18 months to complete. The following 2020 expenditures relate to the addition: Feb. 1 Mar. 1 July 1 Dec. 1 Dec. 31 Payment #1 to contractor Payment to architect Payment #2 to contractor Payment #3 to contractor Asset carrying amount $168,000 21,000 64,400 177,000 Amount of interest $ $430,400 On February 1, Bridgeport issued a $102,000, three-year note payable at a rate of 11% to finance most of the initial payment to the contractor. No other asset-specific debt was entered into. Details of other interest-bearing debt during the period are provided in the table below: Other Debt Instruments Outstanding-2020 9%, 15-year bonds, issued May 1, 2005, matured May 1, 2020 6%, 10-year bonds, issued June 15, 2014 6%, 12-year bonds, issued May 1, 2020 Principal amount $303,000 $500,000 $303,000 What amount of interest should be capitalized for the fiscal year ending…
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: 2021 2022 2023 Cost incurred during the year $ 2,640,000 $ 2,300,000 $ 2,926,000 Estimated costs to complete as of year-end 6,160,000 2,660,000 0 Billings during the year 2,080,000 2,860,000 5,060,000 Cash collections during the year 1,840,000 2,800,000 5,360,000 Westgate recognizes revenue over time according to percentage of completion. 2-a. In the journal below, complete the necessary journal entries for the year 2021 (credit "Various accounts" for construction costs incurred).2-b. In the journal below, complete the necessary journal entries for the year 2022 (credit "Various accounts" for construction costs incurred).2-c. In the journal below, complete the necessary journal entries for the year 2023…
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quest 1 Benson Limited is constructing a Power Plant which was completed on 31st December 2019. The company obtained a bank loan of R1,000,000 at a rate of 15% per annum to construct the Power Plant on 1st January 2019. As of 31st December 2019, Benson Limited also had the following loans outstanding: I. 18% 5-year loan Note of R1,500,000 II. 14% Debentures of R1,000,000 Expenditures on the project were made as follows: I. On the 31st March 2019, R600,000 was incurred; II. R800,000 was incurred on 30th June 2019; III. The final expenditure incurred was R300,000 on 31st December 2019. During the year Benson Limited invested R400,000 of the bank loan for 2 months at an interest of 9% per annum. Required: Determine the amount of borrowing costs to be capitalized and expensed.
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5) In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: 2021 2022 2023 Cost incurred during the year $ 2,100,000 $ 2,450,000 $ 2,695,000 Estimated costs to complete as of year-end 4,900,000 2,450,000 0 Billings during the year 2,200,000 2,350,000 5,450,000 Cash collections during the year 1,900,000 2,300,000 5,800,000 Westgate recognizes revenue over time according to percentage of completion. 4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.) 2021 2022 2023 Costs incurred…
anent Attempt togress Sheridan Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $6,000,000 on January 1, 2025. Sheridan expected to complete the building by December 31, 2025. Sheridan has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2024 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2026 Long-term loan-11% interest, payable on January 1 of each year; principal payable on January 1, 2029 (a) Avoidable interest Assume that Sheridan completed the office and warehouse building on December 31, 2025, as planned, at a total cost of $6,240,000, and the weighted-average amount of accumulated expenditures was $4,320,000. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final…

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