Petty Corp, a calendar year-end company, began construction of a bullding on April 1, 2020. On this date, the company purchased a tract of land for $200,000, paid closing fees of $10,000, and paid back taxes of $15,000. Additionally, Petty obtained a $500,000, 2-year, 12% loan on April 1, 2020 specifically for this project. The only other debt outstanding for Petty during all of 2020 is as follows: $5,000,000 of 5-year, 10% debenture bonds $2,500,000 of 10-year, 7% notes Petty made the following expenditures throughout 2020 to construct the building: Date of Payment Amount of Payment May 1, 2020 $240,000 July 1, 2020 300,000 December 1, 2020 615,000 December 31, 2020 400,000 The capitalization period begins on April 1, 2020. The building was completed on December 31, 2020.
Petty Corp, a calendar year-end company, began construction of a bullding on April 1, 2020. On this date, the company purchased a tract of land for $200,000, paid closing fees of $10,000, and paid back taxes of $15,000. Additionally, Petty obtained a $500,000, 2-year, 12% loan on April 1, 2020 specifically for this project. The only other debt outstanding for Petty during all of 2020 is as follows: $5,000,000 of 5-year, 10% debenture bonds $2,500,000 of 10-year, 7% notes Petty made the following expenditures throughout 2020 to construct the building: Date of Payment Amount of Payment May 1, 2020 $240,000 July 1, 2020 300,000 December 1, 2020 615,000 December 31, 2020 400,000 The capitalization period begins on April 1, 2020. The building was completed on December 31, 2020.
Chapter17: Corporations: Introduction And Operating Rules
Section: Chapter Questions
Problem 45P
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Transcribed Image Text:Compute the 2020 balance in the Land account.
Question 18
Compute the 2020 weighted average accumulated expenditures qualifying for
capitalization of interest.
Transcribed Image Text:Petty Corp, a calendar year-end company, began construction of a building on April 1,
2020. On this date, the company purchased a tract of land for $200,000, paid closing
fees of $10,000, and paid back taxes of $15,000. Additionally, Petty obtained a
$500,000, 2-year, 12% loan on April 1, 2020 specifically for this project. The only
other debt outstanding for Petty during all of 2020 is as follows:
$5,000,000 of 5-year, 10% debenture bonds
$2,500,000 of 10-year, 7% notes
Petty made the following expenditures throughout 2020 to construct the building:
Date of Payment
Amount of Payment
May 1, 2020
$240,000
July 1, 2020
300,000
December 1, 2020
615,000
December 31, 2020
400,000
The capitalization period begins on April 1, 2020. The building was completed on
December 31, 2020.
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