interest during construction

general journal for 2016, 2017, 2018

Accounts nts General Journal FRS Instructions Foothills Power Company begins a 2-year construction project on a power plant on January 1, 2016. The following information is available: The company borrows $10 million on January 1, 2016, at 12%, specifcally for use on the project. The company's other borrowings are: $20 million at 10% $60 million at 8% . The expenditures for the project, incurred evenly each year (excluding capitalized interest from previous years), are as follows: $6,000,000 in 2016 $11,460,000 in 2017 1,800,000 in 2018 The project is completed on March 31, 2018. It took longer than originally planned because the company suspended construction for the last 3 months of 2016 because of a concern about the salability of the electricity produced by the plant Because of reduced demand for electricity, the plant does not begin operations until October 1, 2018. . The company invests at 11% the unused amounts of the $10 million borrowed specifically for the project. Interest income related to this $10 million borrowing is $770,000 for 2016 and $65,800 for 2017 Assume all transactions are in cash unless otherwise indicated Required: 1. Prepare all the necessary journal entries for each of the 3 years. Record all construction costs in a Construction in Progress inventory account 2. How would your answer change if Foothills used IFRS CHART OF ACCOUNTS Foothills Power Company General Ledger REVENUE 411 Sales Revenue 431 Interest Income ASSETS 111 Cash 121 Accounts Receivable 141 Inventory 152 Prepaid Insurance 175 Construction in Progress 181 Building 185 Equipment 198 Accumulated Depreciation EXPENSES 500 Cost of Goods Sold 511 Insurance Expense 512 Utilities Expense 521 Salaries Expense 532 Bad Debt Expense 540 Interest Expense 541 Depreciation Expense 559 Miscellaneous Expenses 910 Income Tax Expense LIABILITIES 211 Accounts Payable 221 Notes Payable 231 Salaries Payable 250 Unearned Revenue 261 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings Prepare the journal entries to record 1the amount borrowed specifically for the project on January 1, 2016. 2. the expenditures on the project each year 3. the interest income earned on the unused amount borrowed specifically for the project in 2016 and 2017 4. the interest expensed and capitalized each year 5. the cost of the building at the completion of the project on March 31, 2018 Addhonal instructions Question not attempted PAGE 2016 PAGE 2017 PAGE 2018 Score: 0/297 GENERAL JOURNAL ACCOUNT TITLE POST REF. DEBIT CREDIT DATE