Weld Corporation is constructing a plant for its own use. Weld capitalizes interest on an annual...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Weld Corporation is constructing a plant for its own use. Weld capitalizes interest on an annual basis. The following expenditures are made during the current year: January 1, $36,000; July 1, $348,000; September 1, $960,000; and December 31, $2,532,000. The following debts were outstanding throughout the current year. Debt Construction note, 12% Short-term note payable, 15% Amount $120,000 480,000 Accounts payable (noninterest-bearing) 480,000 Note: Round all of your answers to the nearest whole number or whole percentage point. a. Compute the amount of interest to be capitalized during the year. Calculation of Actual Interest Debt Debt Amount Interest Interest rate Amount Specific Debt Construction loan $ 120000 12% $ 14400 General Debt Note payable $ 410000 15% 61500 Total Actual Interest $ 75900 Calculation of Weighted Average Accumulated Expenditures Weighted Avg. Months Date Expenditures outstanding Accum. Expenditures January 1 $ 36000 12 $ 36000 July 1 348000 6 174000 September 1 960000 4 320000 December 31 2532000 0 0 Weld Corporation is constructing a plant for its own use. Weld capitalizes interest on an annual basis. The following expenditures are made during the current year: January 1, $36,000; July 1, $348,000; September 1, $960,000; and December 31, $2,532,000. The following debts were outstanding throughout the current year. Debt Construction note, 12% Short-term note payable, 15% Amount $120,000 480,000 Accounts payable (noninterest-bearing) 480,000 Note: Round all of your answers to the nearest whole number or whole percentage point. a. Compute the amount of interest to be capitalized during the year. Calculation of Actual Interest Debt Debt Amount Interest Interest rate Amount Specific Debt Construction loan $ 120000 12% $ 14400 General Debt Note payable $ 410000 15% 61500 Total Actual Interest $ 75900 Calculation of Weighted Average Accumulated Expenditures Weighted Avg. Months Date Expenditures outstanding Accum. Expenditures January 1 $ 36000 12 $ 36000 July 1 348000 6 174000 September 1 960000 4 320000 December 31 2532000 0 0
Expert Answer:
Answer rating: 100% (QA)
a Compute the amount of interest to be capitalized during the year Specifi... View the full answer
Related Book For
Intermediate accounting
ISBN: 978-0077647094
7th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
Posted Date:
Students also viewed these accounting questions
-
What is the expected value of an investment that has a 40% Chance of yielding $1.2 million And a 60% chance of losing 500,000 Dollars
-
An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression...
-
Diana's Amazing Architectures (DAA) has hired your company, Awesome Networks, Inc., to provide consulting services. Diana's staff of architects and interior designers travel around the USA working...
-
Give the domain of each rational function using (a) Set-builder notation (b) Interval notation f(x) 2x - 3x + 4 3x + 8 -8
-
A computer monitor manufacturer subcontracts its major parts to four vendors: A, B, C, and D. Past records show that vendors A and C provide 30% of the requirements each, vendor B provides 25%, and...
-
A major bank has a head office in an industrial park outside Regina, Saskatchewan. The head office has four departments: telephone banking, IT support, human resources, and transaction processing. At...
-
Financial statement data is utilized by a variety of user-groups to include a companys board of directors, bondholders, corporate employees and executives, customers, investment advisors, labor...
-
The following table shows distributions of bachelors degrees earned in 2005 2006 for selected fields of study by all male graduates and by all female graduates. (a) How many female psychology majors...
-
Problem 13-28 SML (LO1, 4) Suppose you observe the following situation: State of Economy Recession Normal Irrational exuberance Probability of Rate of Return if State Occurs State Stock A Stock B...
-
Farmer Joe is evaluating three (3) bids to supply fence hardware for the 5 acres of pasture that need to be fenced. Brady Fences Ltd. submits a bid of $45 per unit with a defect rate of 1.5%; Fence &...
-
List marketing budget and resources required to execute your marketing campaign, and estimate what it will cost. Include items such as labor, materials and other expenses such as: print materials,...
-
Problem 1 Define a function rle_encode (x) satisfying the following criteria: Encodes an input iterable x using run-length encoding (RLE) You may assume x is a sequence of numbers or...
-
Mason ( single ) is a 5 0 percent shareholder in Angels Corporation ( an S Corporation ) . Mason receives a $ 1 9 0 , 5 0 0 salary working full time for Angels Corporation. Angels Corporation...
-
An essay about managers and quality in health care. Explain in detail why financial managers should be concerned with quality initiatives. Provide two specific examples of areas in a healthcare...
-
Envelope Company had the following information during the previous year for one of its product lines: Sales price per unit: $450 Units in beginning inventory: 0 Units started during the year: 35,000...
-
Please show a Statement of Cash Flows for the year ended 31 December 2022. 2. Explain why profit should be reconciled to net operating cash flows. Give examples from this question to explain your...
-
Jax Incorporated reports the following data for its only product. The company had no beginning finished goods inventory and it uses absorption costing. $ 57.30 per unit $ 10.30 per unit $ 7.80 per...
-
Why is double-entry bookkeeping so important?
-
Computerization means that there is no need to understand double-entry bookkeeping. Discuss.
-
Which of the following statements most accurately describes the current production environment and its effect on manufacturers cost structures? a. Due to the relatively high cost of technology and...
Study smarter with the SolutionInn App