Thornton Industries began construction of a warehouse on July 1, 2024. The project was completed on March 31, 2025. No new loanswere required to fund construction. Thornton does have the following two interest-bearing liabilities that were outstanding throughoutthe construction period:$6,000,000, 5% note$9,000,000, 2% bondsConstruction expenditures incurred were as follows:July 1, 2024$ 800,000September 30, 20241,200,0001,200,0001,140,000November 30, 2024January 30, 2025The company's fiscal year-end is December 31.Required:Calculate the amount of interest capitalized for 2024 and 2025.Answer is not complete.Complete this question by entering your answers in the tabs below.20242025Calculate the amount of interest capitalized for 2024.Note: Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).DateExpenditureWeightJuly 1, 2024$September 30, 2024November 30, 2024800,0001,200,000 X1,200,000XXAccumulated expenditures$ 3,200,000Average accumulated expendituresAmount0XInterest Rate%X2034Average$0Portion ofYearOutstandingCapitalizedInterest$02025>

Step 1:To calculate the amount of interest capitalized for 2024 and 2025, we need to follow the…

Answered: Thornton Industries began construction…

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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Crane Company is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were $6300000 on March 1, $5340000 on June 1, and $8850000 on December 31. Crane Company. borrowed $3170000 on January 1 on a5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 3-year $6350000 note payable and an 11%, 4-year, $12050000 note payable. What is the actual interest for Crane Company?
Question 1 Patrick Industries began construction of a warehouse on July 1, 2023. The project was completed on May 31, 2024. Patrick took out a $1,000,000 note at interest of 6% to help finance the construction. Patrick also has the following other debt outstanding throughout the construction period: $2,000,000, 8% note $5,000,000,4% bond Construction expenditures incurred were as follows: July 1, 2023 September 30, 2023 November 30, 2023 $300,000 700,000 500,000 February 1, 2024 200,000 May 31, 2024 200,000 The company's fiscal year-end is December 31 and it uses the specific interest method. Required a. Calculate the amount of interest capitalized for 2023 and 2024. b. Calculate the interest expense to be reported on the income statement for 2023 and 2024. c. Calculate the cost of the new warehouse.
IvanhoeFurniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $10,500,000 on January 1, 2020. Ivanhoe expected to complete the building by December 31, 2020. Ivanhoe has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2019 $4,200,000 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2021 3,150,000 Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2024 2,100,000 Assume that Ivanhoe completed the office and warehouse building on December 31, 2020, as planned at a total cost of $10,920,000, and the weighted-average amount of accumulated expenditures was $7,560,000. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and…
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Edward purchased a new piece of equipment to be used in its new facility. The $445,000 piece of equipment was purchased with a $66,750 down payment and with cash received through the issuance of a $378,250, 9%, 5-year mortgage payable issued on January 1, 2022. The terms provide for annual installment payments of $97,245 on December 31. 1. Prepare an installment payments schedule for the first five payments of the notes payable 2. Prepare the journal entry related to the notes payable for December 31, 2022. 3. Show the balance sheet presentation for this obligation for December 31, 2022. (Hint: Be sure to distinguish between the current and long-term portions of the note.)
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