Exercise 10-9 (Part Level Submission) On July 31, 2017, Swifty Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction was begun immediately and was completed on November 1, 2017. To help finance construction, on July 31 Swifty issued a $324,000, 3-year, 12% note payable at Netherlands National Bank, on which interest is payable each July 31. $216,000 of the proceeds of the note was paid to Minsk on July 31. The remainder of the proceeds was temporarily invested in short-term marketable securities (trading securities) at 10% until November 1. On November 1, Swifty made a final $108,000 payment to Minsk. Other than the note to Netherlands, Swiftys only outstanding liability at December 31, 2017, is a $29,500, 8%, 6-year note payable, dated January 1, 2014, on which interest is payable each December 31.

a) Calculate the interest revenue, weighted-average accumulated expenditures, avoidable interest, and total interest cost to be capitalized during 2017.

Interest Revenue - $2700

Weighted-average accumulated expenditures - $54000

Avoidable Interest - $6480

Interest Capitalized - $6480

b) Prepare the journal entries needed on the books of Swifty Company at each of the following dates

(1)		July 31, 2017.
(2)		November 1, 2017.
(3)		December 31, 2017

Date Account Title and Explanation Debit Credit

7/31 _________________________ _______ ______

_________________________ _______ ______

(To record the note)

_________________________ _______ ______

_________________________ _______ ______

_________________________ _______ ______

(To record the payment to Minsk)

11/1 _________________________ _______ ______

_________________________ _______ ______

_________________________ _______ ______

(To record proceeds from the investment)

_________________________ _______ ______

_________________________ _______ ______

(To record the payment to Minsk)

12/31 _________________________ _______ ______

_________________________ _______ ______

_________________________ _______ ______

_________________________ _______ ______