Question
Blue Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $4,957,500 on January 1,
Blue Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $4,957,500 on January 1, 2017. Blue expected to complete the building by December 31, 2017. Blue has the following debt obligations outstanding during the construction period.
Construction loan-10% interest, payable semiannually, issued December 31, 2016 | $2,015,800 | |
Short-term loan-8% interest, payable monthly, and principal payable at maturity on May 30, 2018 | 1,606,700 | |
Long-term loan-9% interest, payable on January 1 of each year. Principal payable on January 1, 2021 | 993,300 |
Part 1
Correct answer iconYour answer is correct.
Assume that Blue completed the office and warehouse building on December 31, 2017, as planned at a total cost of $5,195,900, and the weighted-average amount of accumulated expenditures was $3,810,800. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final answers to 0 decimal places, e.g. 5,275.)
Avoidable Interest | $ |
Part 2
New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect.
Compute the depreciation expense for the year ended December 31, 2018. Blue 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 $299,200. (Round answer to 0 decimal places, e.g. 5,275.)
Depreciation Expense | $ |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started