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Stellar Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $15,000,000 on January 1, 2020. Stellar expected to complete the building by December 31, 2020. Stellar has the following debt obligations outstanding during the construction period. Construction loan 12% interest, payable semiannually, issued December 31, 2019 $6,000,000 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2021 4,200,000 Long-term loan 11% interest, payable on January 1 of each year. Principal payable on January 1, 2024 3,000,000 (a) Your Answer Correct Answer (Used) Assume that Stellar completed the office and warehouse building on December 31, 2020, as planned at a total cost of $15,600,000, and the weighted average amount of accumulated expenditures was $10,800,000. Compute the avoidable interest on this project. Use Interest rates rounded to 2 decimal places, eg. 7.58% for computational purposes and round final answers to derimal places ee 52751 $15,600,000, and the weighted average amount of accumulated expenditures was $10,800,000. Compute the avoidable interest on this project. Use interest rates rounded to 2 decimal places, eg. 7:58% for computational purposes and round final answers to O decimal places, es: 5,275.) Avoidable Interest 1,220,160 (b) Compute the depreciation expense for the year ended December 31, 2021. Stellar elected to depreciate the building on a straight-line basis and determined that the asset has a useful life of 30 years and a salvage value of $900,000. (Round answer to 0 decimal places, es, 5,275) Depreciation Expense On December 31, 2020, Culver Inc. has a machine with a book value of $1,146,800. The original cost and related accumulated depreciation at this date are as follows. Machine Less: Accumulated depreciation Book value $1,586,000 439,200 $1,146,800 Depreciation is computed at $73,200 per year on a straight-line basis. Presented below is a set of independent situations. For each independent situation indicate the journal entry to be made to record the transaction. Make sure that depreciation entries are made to update the book value of the machine prior to its disposal. On April 1, 2021, Culver sold the machine for $1,268,800 to Yoakam Company. (Credit account titles are automatically Indented when amount is entered. Do not Indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Account Tities and Explanation Debit Credit Date April 1, 2021 (To record current depreciation.) April 1, 2021 (To record sale of the machine.)
