Question
On March 1, 2016, Scotalnd Co. began construction of a small building. The following expenditures were incurred for construction: February 1 $50,000 March 1 $60,000
On March 1, 2016, Scotalnd Co. began construction of a small building. The following expenditures were incurred for construction:
February 1 $50,000
March 1 $60,000
April 1 450,000
August 1 430,000
October 1 260,000
The building was completed and occupied later in the following year. To help pay for construction $350,000 was borrowed on January 1 on a 12%, three-year note payable. The only other two outstanding debts of Scotland were a Bond of $250,000 at 7% and a Note of $550,000 at 10%. Required:
(a) Calculate the weighted-average accumulated expenditures.
(b) Calculate the amount of interest to be capitalized (dont forget to calculate the weighted-average rate for the other outstanding debts) and amount of interest to be paid in total for 2016
(c) Prepare the required journal entry to record the interest payment at December 31, 2016
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