Answered: On July 31, 2020, Marin Company engaged…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 9RE: Dexter Construction Corporation is building a student condominium complex; it started construction...

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On July 31, 2020, Marin Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction begun immediately and was completed on November 1, 2020. To help finance construction, on July 31 Marinissued a $270,000, 3-year, 12% note payable at Netherlands National Bank, on which interest is payable each July 31. $169,000 of the proceeds of the note was paid to Minsk on July 31. The remainder of the proceeds was temporarily invested in short-term marketable securities (trading securities) at 10% until November 1. On November 1, Marin made a final $101,000 payment to Minsk. Other than the note to Netherlands, Marin’s only outstanding liability at December 31, 2020, is a $30,100, 8%, 6-year note payable, dated January 1, 2017, on which interest is payable each December 31.

(a)

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Your answer is correct.

Calculate the interest revenue, weighted-average accumulated expenditures, avoidable interest, and total interest cost to be capitalized during 2020.

Interest revenue		$
Weighted-average accumulated expenditures		$
Avoidable interest		$
Interest capitalized		$

List of Accounts

Attempts: 2 of 9 used

(b)

Prepare the journal entries needed on the books of Marin Company at each of the following dates. (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 0 for the amounts.)

(1)		July 31, 2020.
(2)		November 1, 2020.
(3)		December 31, 2020.

Date	Account Titles and Explanation	Debit	Credit


	(To record the note.)



	(To record the payment to Minsk.)


	(To record the payment to Minsk.)
12/31

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