1.(13 pts) On January 1, 2018, the Oslo Company began construction of a new manufacturing facility. The factory was completed on August 30, 2019. Expenditures on the project were as follows:

January 1, 2018

$ 650,000

March 1, 2019

$1,100,000

April 1, 2018

360,000

June 30, 2019

600,000

Oct 31, 2018

840,000

On July 1st, 2018, the company obtained a 4 year, $1.6 million construction loan with a 9% interest rate. The company's other interest-bearing debt included two long term notes; 1) $3 million at 12% and 2) $4 million at 7%. These two notes were outstanding during all of 2018 and 2019. The company's fiscal year-end is December 31st.

a)(4 pts) Determine the amount of interest expense recorded on the income statement in 2018.

b)(8 pts) Provide the journal entry for interest capitalization in 2019.

c)(1 pts) What is the total cost of the factory when completed on 8/30/19?

(Over)

2.(6 pts) During the current year, Pete Construction trades an old building for a newer building from Jenny Manufacturing Co. The following information is available:

Pete

Original Building (cost)

$ 305,000

Accumulated Depreciation

245,000

Fair Value of Building Given Up

270,000

Cash Paid by Pete

212,000

Prepare the journal entry on to record the exchange on Pete's books assuming the exchange has commercial substance.

Prepare the journal entry on to record the exchange on Pete's books assuming the exchange lacks commercial substance.

3.(1 pts) The following expenditures were among those incurred by Jensen Corporation during the year ended 12/31/16.

$4,000 Replacement of tiles on portion of roof that had been leaking

$6,000 Overhaul of machinery that is expected to extend its useful life for another two years

How much should be charged to repair & maintenance expense for 2016?

A) $0

B) $4,000 C) $6,000 D) $10,000