Question
On January 1, 2024, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on
On January 1, 2024, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2025. Expenditures on the project were as follows:
| January 1, 2024 | $ 1,070,000 |
|---|---|
| March 1, 2024 | 840,000 |
| June 30, 2024 | 380,000 |
| October 1, 2024 | 710,000 |
| January 31, 2025 | 1,170,000 |
| April 30, 2025 | 1,485,000 |
| August 31, 2025 | 2,700,000 |
On January 1, 2024, the company obtained a $3 million construction loan with a 14% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2024 and 2025. The companys other interest-bearing debt included two long-term notes of $6,000,000 and $8,000,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during all of 2024 and 2025. Interest is paid annually on all debt. The companys fiscal year-end is December 31.
Required:
Using the weighted-average interest method, answer the following questions:
- Calculate the amount of interest that Mason should capitalize in 2024 and 2025 using the weighted-average method.
- What is the total cost of the building?
- Calculate the amount of interest expense that will appear in the 2024 and 2025 income statements. (I really just need help with this one! Thank you so much! Much appreciated!)
Answer is not complete. Complete this question by entering your answers in the tabs below. 1. Calculate the amount of interest that Mason should capitalize in 2024 and 2025 using the weighted-average method. 3. Calculate the amount of interest expense that will appear in the 2024 and 2025 income statements. Note: Round "Weighted-average rate of all debt" to 2 decimal places but do not round other intermediate calculations. Enter your answers in dollars rounded to the nearest whole number. Jsing the weighted-average interest method, answer the following questions: 1. Calculate the amount of interest that Mason should capitalize in 2024 and 2025 using the weighted-average method. 2. What is the total cost of the building? 3. Calculate the amount of interest expense that will appear in the 2024 and 2025 income statements. Answer is not complete. Complete this question by entering your answers in the tabs below. What is the total cost of the building? Note: Round "Weighted-average rate of all debt" to 2 decimal places but do not round other intermediate calculations. Enter your answers in dollars rounded to the nearest whole number
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Auditing Beyond Compliance Using The Portable Universal Quality Lean Audit Model
Authors: Janet Bautista Smith
1st Edition
0873898400, 9780873898409
