Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1 Question 1 Capitalization of interest. (15 points) During 2020. Winsor Company constructed a machinery at a total cost of $7,500,000. The construction began on

1
image text in transcribed
image text in transcribed
Question 1 Capitalization of interest. (15 points) During 2020. Winsor Company constructed a machinery at a total cost of $7,500,000. The construction began on January 1 and was completed on December 31, 2020. Actual expenditures during 2020: January 1 $1,000,000 March 31 $3,600,000 September 1 $2,400,000 December 31 $500,000 Total $7.500.000 The company had the following debt outstanding on December 31, 2020: 11%, 5-year note to finance construction of machinery, dated January 1, 2020. $3.500.000 2. 10%, 20-year bonds issued at par on July 1, 2018. $4,000,000 3. 12%, 10-year note payable, dated January 1, 2019. Instructions Compute the amounts of each of the following (show computations for each part). 1. Weighted average accumulated expenditures. (3 points) 1. $6,000,000 2. Avoidable interest. (4 points) Computation of weighted average interest rate for general debts: Avoidable interest x 3. Total actual interest cost. (3 points) Actual interest cost 4. Total interest to be capitalized during 2020 is $ because (2 points) 5. Prepare the Journal entries needed on the book of Winsor Company to capitalize interest. (3 points) Account Debit Credit

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance The Basics

Authors: Erik Banks

3rd Edition

1138919780, 9781138919785

More Books

Students also viewed these Accounting questions

Question

(2) Break- even sales

Answered: 1 week ago

Question

=+d. Write at least five sentences or phrases for body copy.

Answered: 1 week ago

Question

=+b. Create a tagline.

Answered: 1 week ago