Business, 14.06.2021 15:30, BeverlyFarmer
On January 1, 2021, the company obtained a $3 million loan with a 11% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows:
January 2021 $1200,000
March 1 , 2021 660,000
June 30, 2021 520,000
October 1, 2021 620,000
January 31, 2022 360,000
April 30, 2022 675,000
August 31, 2022 1,080,000
On January 1, 2021, the company obtained a $3 million construction loan with a 11% interest rate. Assume the $3 million loan is not specifically tied to construction Of the building. The loan was outstanding all Of 2021 and 2022. The company's other interest-bearing debt included two long-term notes of $4,200,000 and $6,200,000 with interest rates of 6% and 8%, respectively. Both notes were outstanding during all Of 2021 and 2022. Interest is paid annually on all debt. The company's fiscal year-end is December 31.
Required:
a. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the weighted-average method.
b. What is the total cost of the building?
c. Calculate the amount of interest expense that will appear in the 2021 and 2022 income statements.
Answers: 3
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On January 1, 2021, the company obtained a $3 million loan with a 11% interest rate. The building wa...
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