6 A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures forconstruction were as follows: January 1, $650,000; March 31, $750,000; June 30, $550,000; October 30, $1,050,000. To help financeconstruction, the company arranged a 10% construction loan on January 1 for $1,000,000. The company's other borrowings,outstanding for the whole year, consisted of a $4 million loan and a $6 million note with interest rates of 13% and 11%, respectively.Assuming the company uses the specific interest 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 percentageanswers to 2 decimal places (i.e. 0.1234 should be entered as 12.34%).DateJanuary 1March 31June 30October 30Accumulated expendituresAverage accumulated expendituresConstruction loanOther loans (not construction)X Answer is complete but not entirely correct.Expenditure$650,000 X750,000550,000 X1,050,000 X$ 3,000,000Amount$ 1,662,5001,000,00010,000,000 XXWeight12/129/126/122/12Interest Rate10.0011.80%%======Average$650,000562,500275,000175,000$ 1,662,500CapitalizedInterest$ 100,0001,180,000$ 1,280,000

A construction contract is a contract between the owner of the property and the contractor. The…

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, $650,000; March 31, $750,000; June 30, $550,000; October 30, $1,050,000. To help finance construction, the company arranged a 10% construction loan on January 1 for $1,000,000. The company's other borrowings, outstanding for the whole year, consisted of a $4 million loan and a $6 million note with interest rates of 13% and 11%, respectively. Assuming the company uses the specific interest method, calculate the amount of interest capitalized for the year.

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, $650,000; March 31, $750,000; June 30, $550,000; October 30, $1,050,000. To help finance construction, the company arranged a 10% construction loan on January 1 for $1,000,000. The company's other borrowings, outstanding for the whole year, consisted of a $4 million loan and a $6 million note with interest rates of 13% and 11%, respectively. Assuming the company uses the specific interest method, calculate the amount of interest capitalized for the year.

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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