ZuoTi.Pro
Question

Stellar Company is constructing a building. Construction began on February 1 and was completed on December...

Stellar Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,260,000 on March 1, $840,000 on June 1, and $2,100,000 on December 31.

Stellar Company borrowed $700,000 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 8%, 5-year, $1,400,000 note payable and an 11%, 4-year, $2,450,000 note payable. Compute avoidable interest for Stellar Company. Use the weighted-average interest rate for interest capitalization purposes

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1
Payments Funds used Annualised
Mar-01 1260000 10 months 1050000
Jun-01 840000 7 months 490000
Dec-31 2100000 0 months 0
total qualifying for interest capitalization 1540000
loan amount rate interest
Specific loans Funds for project 700000 12% 84000
Other loans for the rest 1400000 8% 112000
2450000 11% 269500
3850000 381500
Weighted average rate for other loans= 381500/3850000 9.91%
Avoidable interest
Weigted average of qualifying loan 1540000
loan amount rate Amount
Interest on specific loan 700000 12.00% 84000
Other loans 840000 9.91% 83244
Avoidable interest 167244
0 4
Add a comment
Know the answer?
Add Answer to:
Stellar Company is constructing a building. Construction began on February 1 and was completed on December...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Vaughn Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditur...

    Vaughn Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,260,000 on March 1, $840,000 on June 1, and $2,100,000 on December 31. Vaughn Company borrowed $700,000 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 8%, 5-year, $1,400,000 note payable and an 11%, 4-year, $2,450,000 note payable. Compute avoidable interest for Vaughn Company. Use the...

  • Stellar Company is constructing a building. Construction began on February 1 and was completed on December...

    Stellar Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $5,040,000 on March 1, $3,360,000 on June 1, and $8,400,000 on December 31. Stellar Company borrowed $2,800,000 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 8%, 5-year, $5,600,000 note payable and an 11%, 4-year, $9,800,000 note payable. Compute avoidable interest for Stellar Company. Use the...

  • Nash Company is constructing a building. Construction began on February 1 and was completed on December...

    Nash Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $3,240,000 on March 1, $2,160,000 on June 1, and $5,400,000 on December 31. Nash Company borrowed $1,800,000 on March 1 on a 5-year, 10% note to help finance construction of the building. In addition, the company had outstanding all year a 12%, 5-year, $3,600,000 note payable and an 11%, 4-year, $6,300,000 note payable. Compute avoidable interest for Nash Company. Use the...

  • Brief Exercise 10-04 Stellar Company is constructing a building. Construction began on February 1 and was...

    Brief Exercise 10-04 Stellar Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,980,000 on March 1, $1,320,000 on June 1, and $3,300,000 on December 31. Stellar Company borrowed $1,100,000 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 5-year, $2,200,000 note payable and an 11%, 4-year, $3,850,000 note payable. Compute avoidable interest for Stellar...

  • Culver Company is constructing a building. Construction began on February 1 and was completed on December...

    Culver Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,860,000 on March 1, $1,260,000 on June 1, and $3,016,770 on December 31. Culver Company borrowed $1,198,000 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 9%, 5-year, $2,088,000 note payable and an 10%, 4-year, $3,308,700 note payable. Compute the weighted-average interest rate used for interest...

  • Teal Company is constructing a building. Construction began on February 1 and was completed on December...

    Teal Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $4,680,000 on March 1, $3,120,000 on June 1, and $7,800,000 on December 31. Teal Company borrowed $2,600,000 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 12%, 5-year, $5,200,000 note payable and an 11%, 4-year, $9,100,000 note payable. Compute avoidable interest for Teal Company. Use the...

  • Tamarisk Company is constructing a building. Construction began on February 1 and was completed on December...

    Tamarisk Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $4,140,000 on March 1, $2,760,000 on June 1, and $6,900,000 on December 31. Tamarisk Company borrowed $2,300,000 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 5-year, $4,600,000 note payable and an 11%, 4-year, $8,050,000 note payable. Compute avoidable interest for Tamarisk Company. Use the...

  • Blue Company is constructing a building. Construction began on February 1 and was completed on December...

    Blue Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $4,860,000 on March 1, $3,240,000 on June 1, and $8,100,000 on December 31. Blue Company borrowed $2,700,000 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 5-year, $5,400,000 note payable and an 11%, 4-year, $9,450,000 note payable. Compute avoidable interest for Blue Company. Use the...

  • Monty Company is constructing a building. Construction began on February 1 and was completed on December...

    Monty Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $2,340,000 on March 1, $1,560,000 on June 1, and $3,900,000 on December 31. Monty Company borrowed $1,300,000 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 14%, 5-year, $2,600,000 note payable and an 11%, 4-year, $4,550,000 note payable. Compute avoidable interest for Monty Company. Use the...

  • Flint Company is constructing a building. Construction began on February 1 and was completed on December...

    Flint Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $3,960,000 on March 1, $2,640,000 on June 1, and $6,600,000 on December 31. Flint Company borrowed $2,200,000 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 12%, 5-year, $4,400,000 note payable and an 11%, 4-year, $7,700,000 note payable. Compute avoidable interest for Flint Company. Use the...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT