• I have tried to complete the schedule for Week3. I'm having an issue trying to figure out the specific interest method to determine the amount of interest capitalized on the building construction. Can you please tell what I am doing wrong with this problem?

Create a schedule that outlines the total spend for San Antonio on the construction expenses. Develop a schedule that shows initial values of the various assets that San Antonio acquired or constructed during 2013. The company uses the specific interest method to determine the amount of interest capitalized on the building construction. Develop a schedule that shows the total interest expense that San Antonio will need to show for 2013 as it relates to construction of the new facility. San Antonio Outfitters Early in its fiscal year ending December 31, 2013, San Antonio Outfitters finalized plans to expand operations. The first stage was completed on April 30th with the purchase of a tract of land on the outskirts of the city. The land and existing building were purchased for $800,000. San Antonio paid $200,000 and signed a noninterest-bearing note requiring the company to pay the remaining $600,000 on April 30, 2015. An interest rate of 8% properly reflects the time value of money for this type of loan agreement. Title search, insurance, and other closing costs totaling $20,000 were paid at closing. During April, the old building was demolished at a cost of $70,000, and an additional $50,000 was paid to clear and grade the land. Construction of a new building began on May 1 and was completed on October 29. Construction expenditures were as follows: San Antonio borrowed $3,000,000 at 8% on May 1 to help finance construction. This loan, plus interest, will be paid in 2014. In November, the company purchased 10 identical pieces of equipment and ofice furniture and fixtures for a lump-sum price of $600,000 on account. The fair values of the equipment and the furniture and fixtures were $455,000 and $245,000, respectively. In December, San Antonio paid a contractor $285,000 for the construction of parking lots and for landscaping. Below is the trial balance for San Antonio Outfitters as of March 31. SAN ANTONIO OUTFITTERS Trial Balance March 31, 2013 Debit Credit Cash .......................................................................................... $3,394,380 Accounts receivable ............................................................... 2,129,500 Prepaid insurance ................................................................... 42,300 Office equipment .................................................................... 119,300 Accumulated Depreciation, Office Equipment .................. Inventory ................................................................. ................ Building ................................................................... ................ Land......................................................................... $11,750 2,104,000 100,000 720,000 ................. Accounts payable ................................................................... Notespayable........................................................... ............... San Antonio, Capital .............................................................. San Antonio, Withdrawals .................................................... Revenue .................................................................. ................. Wages expense ........................................................................ Depreciation Expense, Ofice Equipment ........................... Equipment rental expense..................................................... Office Supplies Expense ........................................................ Advertising expense............................................................... Repairs expense ...................................................................... Totals ....................................................................... ................. $ 104,410 600,000 2,541,700 10,450 6,144,100 654,500 4,250 71,410 7,500 32,400 11,970 $9,401,96 0 $9,401,960 Name Danette Williams San Antonio Outfitters Land Account 12/31/XXXX Cash Paid for Land Land Closing Cost Demolished Old Building Clearing and Grading Totals Total 200,000 800,000 20,000 70,000 50,000 1,140,000 1,140,000 Name Danette Williams General Journal GENERAL JOURNAL Date April April April May May July Sept Oct Nov Dec Account Titles and Explanation 30 land and existing building Cash Paid for Land Note payable (April 2015) To record purchase of Land 30 Demolished of old Building Cash to record purchase of Land 30 Cleaning and grading Cash To record purchase of Land 1 Building Cash to record the Note Payable 30 Building Cash to record construction expenditures 30 Building Cash to record construction expenditures 1 Building Cash to record construction expenditures 1 Building cash to record construction expenditures 30 Office Equipment Furniture Note payable to record office furniture and equipment 31 Building Improvement Cash to record parking lot and landscaping P. R. Debit 800,000 Credit 200,000 600,000 70,000 70,000 50,000 50,000 3,000,000 3,000,000 1,200,000 1,200,000 1,500,000 1,500,000 900,000 900,000 1,800,000 1,800,000 455,000 145,000 600,000 285,000 285,000 Name Danette Williams Worksheet San Antonio Outfitters Work Sheet For Month Ended December 31, 2013 Equipment Rental Expense Office Supplies Expense Advertising Expense Repair Expense Unadjusted Trial Balance Dr. Cr. 509,380 2,129,500 42,300 264,300 11,750 2,104,000 455,000 5,785,000 1,520,000 704,410 4,200,000 2,541,700 10,450 6,144,100 654,500 4,250 71,410 7,500 32,400 11,970 Total 13,601,960 13,601,960 Account Titles Cash Accounts receivable Prepaid Insurance Office Equipment Accumulated Depreciation office Equip Inventory Equipment Building Land Account Payable Note Payable San Antonio Capital San Antonio, Withdrawals Revenue Wage Expense Depreciation Expense Office Equip Adjustments Dr. Cr. Adjusted Trial Balance Dr. Cr. Income Statement Dr. Cr. Balance Sheet & Statement of Owner's Equity Dr. Balance Sheet & Statement of Owner's Equity Cr. Name Income Statement San Antonio Outfitters Income Statement For Year Ended December 31, XXXX San Antonio Outfitters Statement of Changes in Owner's Equity For Year Ended December 31, XXXX San Antonio Outfitters Balance Sheet December 31, XXXX Name Post Closing Trial Balance San Antonio Outfitters Post-Closing Trial Balance 12/31/XXXX Totals