Question
On July 31, 2020, Cheyenne Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction begun immediately and was completed on
On July 31, 2020, Cheyenne Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction begun immediately and was completed on November 1, 2020. To help finance construction, on July 31 Cheyenne issued a $303,600, 3-year, 12% note payable at Netherlands National Bank, on which interest is payable each July 31. $208,600 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, Cheyenne made a final $95,000 payment to Minsk. Other than the note to Netherlands, Cheyennes only outstanding liability at December 31, 2020, is a $28,200, 8%, 6-year note payable, dated January 1, 2017, on which interest is payable each December 31.
Interest revenue $ 2375
Weighted-average accumulated expenditures $ 52150
Avoidable interest $ 6258
interest capitalized 6258
Prepare the journal entries needed on the books of Cheyenne Company at each of the following dates. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
(1) | July 31, 2020. | |
(2) | November 1, 2020. | |
(3) | December 31, 2020. |
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