A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $610,000; March 31, $710,000; June 30, $510,000; October 30, $930,000. The company arranged a 10% loan on January 1 for $920,000. Assume the $920,000 loan is not specifically tied to the construction of the building. The company's other borrowings, outstanding for the whole year, consisted of a $2 million loan and a $4 million note with interest rates of 12% and 9%, respectively. Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year. Note: Enter your answers in whole dollars and not in millions. Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34%). Answer is complete but not entirely correct. Date Expenditure Weight Average January 1 March 31 June 30 $ 610,000 x 12/12 $ 610,000 710,000 9/12 = 532,500 510,000 6/12 = 255,000 October 30 930,000 x 2/12 = 155,000 Accumulated expenditures $ 2,760,000 $ 1,552,500

A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $610,000; March 31, $710,000; June 30, $510,000; October 30, $930,000. The company arranged a 10% loan on January 1 for $920,000. Assume the $920,000 loan is not specifically tied to the construction of the building. The company's other borrowings, outstanding for the whole year, consisted of a $2 million loan and a $4 million note with interest rates of 12% and 9%, respectively. Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year. Note: Enter your answers in whole dollars and not in millions. Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34%). Answer is complete but not entirely correct. Date Expenditure Weight Average January 1 March 31 June 30 $ 610,000 x 12/12 $ 610,000 710,000 9/12 = 532,500 510,000 6/12 = 255,000 October 30 930,000 x 2/12 = 155,000 Accumulated expenditures $ 2,760,000 $ 1,552,500

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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