Chapter : Fixed Assets On December 10, 2018, Stella contracted with Billys Construction to have a new building constructed for $1,600,000 on land owned by Tosewarld. The payments made by Stella to Billys Construction are shown in the schedule below. See table Additional Information : Construction was completed and the building was ready for occupancy on December 31, 2019. Stella had the following debt outstanding at December 31, 2019 : 17%, 3-year note of $800,000 to finance construction of building, dated December 31, 2018, with interest payable annually on December 31 (Specific Construction Debt) 13%, 5-year note payable of $800,000, dated December 31, 2015, with interest payable annually on December 31 10%, 10-year bonds issue of $850,000, bonds issued December 31, 2014, with interest payable annually on December 31 Instructions: a. Some interest cost of Stella is capitalized for the year ended December 31, 2019. Identify the items relating to interest costs that must be disclosed in Stella's financial statements. Thereafter, compute the amount of each of the items that must be disclosed. b. According to your answer in (c), make journal on December 31, 2019 to recognize interest costs on Stella’s financial statements

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter3: Accrual Accounting

Section: Chapter Questions

Problem 6MCQ: Rons Diner received the following bills for December 2019 utilities: â€¢ Electricity: $625 on...

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Chapter : Fixed Assets On December 10, 2018, Stella contracted with Billys Construction to have a new building constructed for $1,600,000 on land owned by Tosewarld. The payments made by Stella to Billys Construction are shown in the schedule below. See table Additional Information : Construction was completed and the building was ready for occupancy on December 31, 2019. Stella had the following debt outstanding at December 31, 2019 : 17%, 3-year note of $800,000 to finance construction of building, dated December 31, 2018, with interest payable annually on December 31 (Specific Construction Debt) 13%, 5-year note payable of $800,000, dated December 31, 2015, with interest payable annually on December 31 10%, 10-year bonds issue of $850,000, bonds issued December 31, 2014, with interest payable annually on December 31 Instructions: a. Some interest cost of Stella is capitalized for the year ended December 31, 2019. Identify the items relating to interest costs that must be disclosed in Stella's financial statements. Thereafter, compute the amount of each of the items that must be disclosed. b. According to your answer in (c), make journal on December 31, 2019 to recognize interest costs on Stella’s financial statements

Date
Amount
1 January 2019
$700.000
1 May 2019
$300.000
31 December 2019 $600.000
Total Payments
$1.600.000

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