On March 1, 2020, Swifty Corporation purchased land for an office site by paying $2660000 cash....
On March 1, 2020, Swifty Corporation purchased land for an office site by paying $2660000 cash. Swifty began construction on the office building on March 1. The following expenditures were incurred for construction: Date Expenditures March 1, 2020 $1750000 April 1, 2020 2480000 May 1, 2020 4530000 June 1, 2020 4710000 The office was completed and ready for occupancy on July 1. To help pay for construction, and purchase of land $3690000 was borrowed on March 1, 2020 on a 9%, 3-year note payable. Other than the construction note, the only debt outstanding during 2020 was a $1470000, 12%, 6-year note payable dated January 1, 2020. The actual interest cost incurred during 2020 was
Homework Answers
| Construction Begin | March1,2020 | ||||||||||
| Amount | Interest | ||||||||||
| Specific borrowing | $3,690,000 | 9% | |||||||||
| Other Borrowing | $1,470,000 | 12% | |||||||||
| March1,2020 | April,1 | May,1 | June,1 | ||||||||
| Construction expenses | $1,750,000 | $2,480,000 | $4,530,000 | $4,710,000 | |||||||
| Completion of construction | July,1, 2020 | ||||||||||
| Interest Cost to be capitalized | |||||||||||
| Borrowing | Interest | Interest | |||||||||
| amount | Rate | Cost | |||||||||
| $1,750,000 | 9% | $13,125 | (1750000*9%*(1/12) | Interest for March,2020 | Specific Borrowing | ||||||
| $13,125 | Interest for April,2020 | Specific Borrowing | |||||||||
| (3690000-1750000) | $1,940,000 | 9% | $14,550 | (1940000*9%*(1/12) | Interest for April, 2020 | Specific Borrowing | |||||
| (2480000-1940000) | $540,000 | 12% | $5,400 | (540000*12%*(1/12) | Interest for April, 2020 | Other borrowing | |||||
| $3,690,000 | 9% | $27,675 | (3690000*9%*(1/12) | Interest for May 2020 | Specific Borrowing | ||||||
| $540,000 | 12% | $5,400 | (540000*12%*(1/12) | Interest for May 2020 | Other borrowing | ||||||
| (1470000-540000) | $930,000 | 12% | $9,300 | (930000*12%*(1/12) | Interest for May 2020 | Other borrowing | |||||
| $3,690,000 | 9% | $27,675 | (3690000*9%*(1/12) | Interest for June,2020 | Specific Borrowing | ||||||
| $1,470,000 | 12% | $14,700 | (1470000*12%*(1/12) | Interest for June,2020 | Other borrowing | ||||||
| TOTAL INTEREST COST | $130,950 | ||||||||||
| Actual Interest Cost Incurred during 2020 | $130,950 | ||||||||||
Add Answer to:
On March 1, 2020, Swifty Corporation purchased land for an
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Problem 10-5
On January 1, 2020, Sheridan Corporation purchased for $680,000 a
tract of land (site number 101) with a building. Sheridan paid a
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and title guarantee insurance of $24,480. The closing statement
indicated that the land value was $680,000 and the building value
was $136,000. Shortly after acquisition, the building was razed at
a cost of $73,440.
Sheridan entered into a $4,080,000 fixed-price contract with
Slatkin Builders, Inc. on...
On January 1, 2020, Marigold Corporation purchased for $680.000 a tract of land (site number 101)...
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On March 1, 2017, Sheridan Company purchased land for an office
site by paying $2600000 cash. Sheridan began construction on the
office building on March 1. The following expenditures were
incurred for construction:
Date
Expenditures
March 1, 2017
$ 1810000
April 1, 2017
2490000
May 1, 2017
4420000
June 1, 2017
4700000
The office was completed and ready for occupancy on July 1. To help
pay for construction, and purchase of land $3670000 was borrowed on
March 1, 2017 on...
2. On March 1, 2017, Newton Company purchased land for an office site by paying $2,700,000 cash. Newton began construction on the office building on March 1. The following expenditures were incurred for construction: Date March 1, 2017 April 1, 2017 May 1, 2017 June 1, 2017 $ 1,800,000 2,520,000 4,500,000 4,800,000 The office was completed and ready for occupancy on July 1. To help pay for construction, and purchase of land $3,600,000 was borrowed on March 1, 2017 on...
On January 1, 2020, Marin Corporation purchased for $720,000 a tract of land (site number 101) with a building. Marin paid a real estate broker's commission of $51,840, legal fees of $8,640, and title guarantee insurance of $25,920. The closing statement indicated that the land value was $720,000 and the building value was $144,000. Shortly after acquisition, the building was razed at a cost of $77,760. Marin entered into a $4,320,000 fixed-price contract with Slatkin Builders, Inc. on March 1,...
Problem 10-5
On January 1, 2020, Sheridan Corporation purchased for $680,000 a
tract of land (site number 101) with a building. Sheridan paid a
real estate broker’s commission of $48,960, legal fees of $8,160,
and title guarantee insurance of $24,480. The closing statement
indicated that the land value was $680,000 and the building value
was $136,000. Shortly after acquisition, the building was razed at
a cost of $73,440.
Sheridan entered into a $4,080,000 fixed-price contract with
Slatkin Builders, Inc. on...
On January 1, 2020, Marigold Corporation purchased for $680.000 a tract of land (site number 101) with a building Marigold paid a real estate broker's commission of $48,960, legal fees of $8,160, and title guarantee insurance of $24.480. The dosing statement indicated that the land value was $680,000 and the building value was $136,000. Shortly after acquisition, the building was razed at a cost of $73,440. Marigold entered into a $4,080,000 fixed-price contract with Slatkin Builders, Inc. on March 1,...
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