Question
EA Co. wants to construct a small warehouse to store some materials begun on April 1 , 2020 and was completed on December 31, 2020.
EA Co. wants to construct a small warehouse to store somematerials begun on April 1, 2020 and was completed on December 31, 2020. The following expenditures were incurred for construction April 1
$ 15,000
May 1
$ 8,000
May 31
$ 5,000
July 1
$ 20,000
August 31
$ 10,000
December 31
$20,000
In order to help finance the construction, EA Co. issued the following during 2020.
1. $20,000, of 10-year, 9% bonds payable, issued at par on March 31, 2020, with interest payable annually on March31.
2. 1,000,000 shares of no-par ordinary shares, issued at $10 per share on October 1, 2020.
In addition to the 9% bonds payable, the only debt outstanding during 2020 was a $750,000, 12% note payable dated January 1, 2011 and due January 1, 2025, with interest payable annually on January 1.
Compute the amounts of each of the following (show computations):
1. Weighted-average accumulated expenditures qualifying for capitalization of interest cost.
2. Avoidable interest incurred during 2020.
3.Total amount of interest cost to be capitalized during 2020
3. EA Co. wants to construct a small warehouse to store some materials begun on April 1, 2020 and was completed on December 31, 2020. The following expenditures were incurred for construction. April 1 $ 15,000 May 1 $ 8,000 May 31 $5,000 July 1 $ 20,000 August 31 S 10,000 December 31 $20,000 In order to help finance the construction, EA Co. issued the following during 2020. 1. $20,000, of 10-year, 9% bonds payable, issued at par on March 31, 2020, with interest payable annually on March 31. 2. 1,000,000 shares of no-par ordinary shares, issued at $10 per share on October 1, 2020. In addition to the 9% bonds payable, the only debt outstanding during 2020 was a $750,000, 12% note payable dated January 1, 2011 and due January 1, 2025, with interest payable annually on January 1. Compute the amounts of each of the following (show computations): 1. Weighted-average accumulated expenditures qualifying for capitalization of interest cost. 2. Avoidable interest incurred during 2020. 3. Total amount of interest cost to be capitalized during 2020
April 1 | $ 15,000 |
May 1 | $ 8,000 |
May 31 | $ 5,000 |
July 1 | $ 20,000 |
August 31 | $ 10,000 |
December 31 | $20,000 |
In order to help finance the construction, EA Co. issued the following during 2020.
1. $20,000, of 10-year, 9% bonds payable, issued at par on March 31, 2020, with interest payable annually on March31.
2. 1,000,000 shares of no-par ordinary shares, issued at $10 per share on October 1, 2020.
In addition to the 9% bonds payable, the only debt outstanding during 2020 was a $750,000, 12% note payable dated January 1, 2011 and due January 1, 2025, with interest payable annually on January 1.
Compute the amounts of each of the following (show computations):
1. Weighted-average accumulated expenditures qualifying for capitalization of interest cost.
2. Avoidable interest incurred during 2020.
3.Total amount of interest cost to be capitalized during 2020
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