The following information is from Bowin Inc. for a long - term construction project that is expected
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Question:
The following information is from Bowin Inc. for a longterm construction project that is expected to be completed in January of next year. The construction project is for a building intended for the companys own use. The capital expenditure on January of the current year is for the purchase of land for the building site. No new construction loans were opened for the project during the year. All debt was outstanding for the full year.
Capital Expenditures for Current Year
Date Actual Expenditures
Jan. $
Mar.
June
Nov.
Outstanding Debt in Current Year
Debt Debt Amount Interest Rate
Note payable $
Note payable
Bond payable
Note payable
Compute Interest to Capitalize and Expense
Journal Entry in Year
Journal Entries in Year
a Compute interest to be capitalized and interest to be expensed, during the year.
Calculation of Actual Interest
Debt Debt Amount Interest rate Interest Amount
Specific Debt
Construction loan
General Debt
Note payable
Note payable
Bond payable
Note payable
Total
Calculation of Weighted Average Accumulated Expenditures
Date Expenditures Months Outstanding WA Accum. Expenditures
January
March
June
November
Total
Calculation of annual interest rate used in the schedule that follows
Numerator : Denominator Interest Rate
General Debt
:
Calculation of Avoidable Interest
Weighted Average
Accumulated Interest Avoidable
Debt Category Expenditures Rate Interest
Specific Debt
General Debt
Total
Capitalized Interest
Interest expense
Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Posted Date: