On December 31, 2019, Pronghorn Inc. borrowed $4,140,000 at 13% payable annually to finance the construction of a new building. In 2020, the company made the following expenditures related to this building: March 1, $496,800; June 1, $828,000; July 1, $2,070,000; December 1, $2,070,000. The building was completed in February 2021. Additional information is provided as follows. 1. Other debt outstanding 10-year, 14% bond, December 31, 2013, interest payable annually $5,520,000 6-year, 11% note, dated December 31, 2017, interest payable annually $2,208,000 2. March 1, 2020, expenditure included land costs of $207,000 3. Interest revenue earned in 2020 $67,620
On December 31, 2019, Pronghorn Inc. borrowed $4,140,000 at 13% payable annually to finance the construction of a new building. In 2020, the company made the following expenditures related to this building: March 1, $496,800; June 1, $828,000; July 1, $2,070,000; December 1, $2,070,000. The building was completed in February 2021. Additional information is provided as follows. 1. Other debt outstanding 10-year, 14% bond, December 31, 2013, interest payable annually $5,520,000 6-year, 11% note, dated December 31, 2017, interest payable annually $2,208,000 2. March 1, 2020, expenditure included land costs of $207,000 3. Interest revenue earned in 2020 $67,620
Chapter18: Accounting Periods And Methods
Section: Chapter Questions
Problem 18DQ
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100%
Transcribed Image Text:Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31,
2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No
Entry" for the account titles and enter O for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
December 31, 2020
Transcribed Image Text:On December 31, 2019, Pronghorn Inc. borrowed $4,140,000 at 13% payable annually to finance the construction of a new building.
In 2020, the company made the following expenditures related to this building: March 1, $496,800; June 1, $828,000; July 1,
$2,070,000; December 1, $2,070,000. The building was completed in February 2021. Additional information is provided as follows.
1.
Other debt outstanding
10-year, 14% bond, December 31, 2013, interest payable annually
$5,520,000
6-year, 11% note, dated December 31, 2017, interest payable annually
$2,208,000
2.
March 1, 2020, expenditure included land costs of $207,000
Interest revenue earned in 2020
$67,620
3.
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