Question
I only need help with the ones that are still blank. The answers that I filled in so far are correct. Please see the attached
I only need help with the ones that are still blank. The answers that I filled in so far are correct. Please see the attached file.
On January 1, 2016, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2017. |
Expenditures on the project were as follows: |
January 1, 2016 | $ | 1,310,000 | |
March 1, 2016 | 1,020,000 | ||
June 30, 2016 | 1,220,000 | ||
October 1, 2016 | 1,020,000 | ||
January 31, 2017 | 333,000 | ||
April 30, 2017 | 666,000 | ||
August 31, 2017 | 963,000 |
On January 1, 2016, the company obtained a $3,700,000 construction loan with a 12% interest rate. The loan was outstanding all of 2016 and 2017. The company?s other interest-bearing debt included two long-term notes of $3,000,000 and $7,000,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during all of 2016 and 2017. Interest is paid annually on all debt. The company?s fiscal year-end is December 31. |
Required: |
1. | Calculate the amount of interest that Mason should capitalize in 2016 and 2017 using the specific interest method. |
2. | What is the total cost of the building? |
3. | Calculate the amount of interest expense that will appear in the 2016 and 2017 income statements. |
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