Question

CALCULATOR PRINTER VERSION CRACK Exercise 10-08 On December 31, 2019. Shamrock Inc. borrowed $3.240,000 at 13% payable annually to finance the construction of a new building. In 2020, the company made the following expenditures related to this building: March 1, $388,800: June 1, $648,000: July 1, $1,620,000; December 1, $1,620,000. The building was completed in February 2021. Additional Information is provided as follows. 1. Other debt outstanding 10-year, 14% bond, December 31, 2013, Interest payable annually 6-year, 11% note, dated December 31, 2017, Interest payable annually 2. March 1, 2020, expenditure included and costs of $162,000 3. Interest revenue earned in 2020 $4,320,000 $1,728,000 $52,920 Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building. The amount of interest SHOW LIST OF ACCOUNTS Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31, 2020. (Credit accounties are automatically Indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account tities and enter for the amounts) Date Account Titles and Explanation Debit Credit December 31, 2020 Question Attempts of 5 used SAVE FOR LATER S ET ANSWER

Answer 1

Expenditure 2020	Investments	investment in months remainng	Average investment
Mar-01	388800	10/12	324000
Jun-01	648000	7/12	378000
Jul-01	1620000	6/12	810000
Dec-01	1620000	1/12	135000
			1647000
Interest to be paid on Average investment
Amount	1647000
Int rate	13%
Interest	214110
Interest to be paid on Loans	Amount	Rate of Interest	Actual Int Cost
Finance Construction	3240000	13%	421200
14% Bond	4320000	14%	604800
11% Note	1728000	11%	190080
			1216080
Interest payable	1216080
Less: Int amount to be capilatised	214110
Net Interest payable	1001970

Journal

Dr. Building 214110

Dr.Interest Expenses 1001970

Cr Cash 1216080