Klutlan Industries began construction of a warehouse on July 1, 2018. The project was completed on March 31, 2019. No new loans were required to fund construction. Klutlan does have the following two interest-bearing liabilities that were outstanding throughout the construction period: $2,000,000, 8% note $8,000,000, 5% bonds Construction expenditures incurred were as follows: July 1, 2018 $520,000 September 30, 2018 600,000 November 30, 2018 600,000 January 30, 2019 540,000

Klutlan Industries began construction of a warehouse on July 1, 2018. The project was completed on March 31, 2019. No new loans were required to fund construction. Klutlan does have the following two interest-bearing liabilities that were outstanding throughout the construction period: $2,000,000, 8% note $8,000,000, 5% bonds Construction expenditures incurred were as follows: July 1, 2018 $520,000 September 30, 2018 600,000 November 30, 2018 600,000 January 30, 2019 540,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 14RE: On January 1, 2019, Boater Company issues a 20,000 non-interest-bearing, 5-year note for equipment....

See similar textbooks

Similar questions

The following transactions pertain to the general borrowings made during 2021 by Owshi Company in connection with the construction of the company’s new warehouse: • 8% bank loan- $2,400,000 • 6% short-term note- $1,600,000 • 8% long-term note- $2,000,000 The construction started on January 1, 2021 and the warehouse was completed on December 31, 2021. Expenditures on the warehouse were as follows: • January 1- $400,000 • March 31- $1,000,000 • June 30- $1,200,000 • September 30- $1,000,000 • December 31- $400,000 How much is the capitalizable borrowing cost of Owshi Company?
Hawkins Corporation began construction of a motel on March 31, 2021. The project was completed on April 30, 2022. No new loans were required to fund construction. Hawkins does have the following two interest-bearing liabilities that were outstanding throughout the construction period:$5,100,000, 6% note$14,540,000, 10% bondsConstruction expenditures incurred were as follows: March 31, 2021 $ 3,910,000 June 30, 2021 5,910,000 November 30, 2021 1,782,000 February 28, 2022 2,910,000 The company’s fiscal year-end is December 31.Required:Calculate the amount of interest capitalized for 2021 and 2022. (Round weighted average interest rate to 2 decimal places and final answers to the nearest whole dollar.)
The following transactions pertain to the general borrowings made during 2021 by Jeon Company in connection with the construction of the company’s new warehouse: • 8% bank loan- P2,400,000 • 6% short-term note- P1,600,000 • 8% long-term note- P2,000,000 The construction started on January 1, 2021 and the warehouse was completed on December 31, 2021. Expenditures on the warehouse were as follows: • January 1- P400,000 • March 31- P1,000,000 • June 30- P1,200,000 • September 30- P1,000,000 • December 31- P400,000 How much is the capitalizable borrowing cost of Jeon Company?Required to answer. Single choice.
On January 1, 2024, 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 2024 and 2025. The company’s other interest-bearing debt included two long-term notes of $4,800,000 and $6,800,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during all of 2024 and 2025. Interest is paid annually on all debt. The company’s fiscal year-end is December 31.
On January 1, 2014, ENERVATE TO WEAKEN Company had the following borrowings made for general purposes and a part of the proceeds was used to finance the construction of a qualifying asset. 12% short-term note-P40,000,000 14% bank loan (3-year)- 72,000,000 16% note payable (5-year)- 88,000,000 The construction of the qualifying asset was started on immediately and completed on June 30, 2015 and expenditures incurred on the qualifying asset were as follows: Jan. 1 P19,200,000 Mar. 31 8,800,000 July 30 14,000,000 March 31 21,600,000 June 30 1,200,000 How much is the cost of the new constructed building?
On January 1, 2018, Dreamworld Co. began construction of a new warehouse. The building was finished and ready for use on September 30, 2019. Expenditures on the project were as follows: January 1, 2018 September 1, 2018 December 31, 2018 $340,000 $510, 000 $510,000 $510,000 $340,000 March 31, 2019 September 3e, 2019 Dreamworld had $7,000,000 in 14% bonds outstanding through both years. Dreamworld's average accumulated expenditures for 2018 was:
On January 3, 2020, Mercury Company began self-constructing an asset that qualified for interest capitalization. On January 5, Mercury borrowed $300,000 on an 8% construction loan. In addition, Mercury had $400,000 of 6% notes payable and $600,000 of 9% bonds payable outstanding. By December 31, expenditures (occurring evenly throughout the year) of $900,000 had been made on the asset. Investment of unused funds during the year yielded $1,200 of interest revenue.Required:Compute the amount of interest that should be capitalized during 2020.
On January 2, 2018, Keystone Company borrowed $60,000 from Bank Three. The loan was to be repaid in equal principal installments of $10,000, payable on December 31 of each year, beginning on December 31, 2018. Disregarding interest, the amount of the $60,000 loan that should be considered a long-term liability on the company's balance sheet for the year ended December 31, 2019 would be: O $30,000 Ⓒ $40,000 O $50,000 O $20,000 O None of the above.
Noel Bank loaned 9,000,000 to a borrower on January 1, 2017. The terms of the loan were payment in full on January 1, 2022, plus annual interest payment at 12%. The debtor paid interest on January 1, 2018 as scheduled. However, due to financial setbacks, the debtor was unable to pay interest on 2019. BPI accrued interest on Dec. 31, 2018 but did not continue to accrue interest for 2019 due to considered impairment of the loan. On December 31, 2019, BPI projected these cash flows: December 31, 2020 - P 1,500,000 December 31, 2021 - 2,000,000 December 31, 2022 - 3,000,000 December 31, 2023 - 2,500,000 The present value of 1 at 12% is as follows: For 1 period - 0.8929 For 2 periods - 0.7972 For 3 periods - 0.7118 For 4 periods - 0.6355 How much should be recognized as interest income for 2020?
Required information [The following information applies to the questions displayed below.] As of December 31, 2019, Sandy Beach had $8,300,000 in 5.0 percent serial bonds outstanding. Cash of $443,000 is the debt service fund's only asset as of December 31, 2019, and there are no liabilities. The serial bonds pay interest semiannually on January 1 and July 1, with $500,000 in bonds being retired on each interest payment date. Resources for payment of Interest are transferred from the General Fund, and the debt service fund levies property taxes in an amount sufficient to cover principal payments. c. Prepare a balance sheet for the debt service fund as of December 31, 2020. Cash Total Assets SANDY BEACH Debt Service Fund Balance Sheet December 31, 2020 Assets Deferred Inflows of Resources Fund Balances S Total Deferred Inflows of Resources and Fund Balance S 0 0
Change Entity had the following borrowing on January 1 of the current year. The borrowings were made for general purposes and the proceeds were partly used to finance the construction of a new building.10% bank loan, 2,800,000 - 280,000 annual interest10% short-term note, 1,600,000 - 160,000 annual interest12% long-term loan, 2,000,000 - 240,000 annual interestThe construction of the building was started on January 1 and was completed on December 31 of the current year. Expenditures on the building were made as follows: January 1 - 400,000; March 31 - 1,000,000; June 30 - 1,200,000; September 30 - 1,000,000; December 31 - 400,000. (Round off the capitalization rate to 3-decimal). What is the average expenditure?
Vilna Ltd., during the year ended December 31, 2021, had the following transactions related to money-market instruments recorded at amortized cost: 2 Purchased a 120-day $100,000 treasury bill maturing on April 1 for $95,700. 1 The treasury bill matured. 1 Invested $75,000 in a money-market fund. 31 Received notification that $188 of interest had been earned and added to the fund. 30 Received notification that $188 of interest had been earned and added to the fund. 15 Cashed the money-market fund and received $75,470. 1 Purchased a 90 day, 2%, $40,000 treasury bill for $39,221. Jan. Apr. Aug. Sept. Oct. Nov. Instructions: a. Prepare the journal entries to record the above transactions. b. Prepare any required adjusting journal entries at December 31. Round amounts to the nearest dollar. Show ALL calculations for full marks.