Question E10.9

a. Calculate the interest revenue, weighted-average accumulated expenditures, avoidable interest, and total interest cost to be capitalized during 2019. (Round all computations to the nearest dollar)

b. Prepare the journal entries needed on the books of Bismarck Company at each of the following dates.

1. July 31, 2019
2. November 1, 2019
3. December 31, 2019
   

vided as follows. HK$600,000; July 1, HK$1,500,000; and December 1, HK$1,200,000. Additional information is pro- 1. Other debt outstanding 10-year, 11% bond, December 31, 2012, interest payable annually 6-year, 10% note, dated December 31, 2016, interest payable annually 2. March 1, 2019, expenditure included land costs of HK$150,000 HK$4,000,000 3. Interest revenue earned in 2019 on funds related to specific borrowing HK$1,600,000 Instructions HK$49,000 a. Determine the amount of interest to be capitalized in 2019 in relation to the construction of the building- b. Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31, 2019. E10.9 (LO2) (Capitalization of Interest) On July 31, 2019, Bismarck Company engaged Duval Tooling Company to construct a special-purpose piece of factory machinery. Construction began im- mediately and was completed on November 1, 2019. To help finance construction, on July 31 Bismarck issued a $400,000, 3-year, 12% note payable at Wellington National Bank, on which interest is payable each July 31. $300,000 of the proceeds of the note was paid to Duval 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, Bismarck made a final $100,000 payment to Duval. Other than the note to Wellington, Bismarck's only outstanding liability at December 31, 2019, is a $30,000, 8%, 6-year note payable, dated January 1, 2016, on which interest is payable each December 31. for Instructions a. Calculate the interest revenue, weighted-average accumulated expenditures, avoidable interest, and total interest cost to be capitalized during 2019. (Round all computations to the nearest dollar.) b. Prepare the journal entries needed on the books of Bismarck Company at each of the following dates. 1. July 31, 2019. 2. November 1, 2019. 3. December 31, 2019. E10.10 (LOZ) (Capitalization of Interest) The following three situations involve the capitalization of interest. Situation I: On January 1, 2019, Columbia Outfitters signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of R$4,000,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2019, to finance the construction cost, 0 payable in 10 annual installments of R$400,000, plus interest at it and progress payments totaling R$1,500,000 Columbia ba enditures was R$900,000 for which Columbia