On January 1, 2020, Sunland Company purchased land for an office site by paying $2680000 cash. Sunland began construction on the office building on January 1. The following expenditures were incurred for construction: Date Expenditures January 1, 2020 $ 1780000 April 1, 2020 2530000 May 1, 2020 4490000 June 1, 2020 4720000 The office was completed and ready for occupancy on July 1. To help pay for construction, and purchase of land $3650000 was borrowed on January 1, 2020 on a 9%, 3-year note payable. Other than the construction note, the only debt outstanding during 2020 was a $1400000, 12%, 6-year note payable dated January 1, 2020. Assume the weighted-average accumulated expenditures for the construction project are $4300000. The amount of interest cost to be capitalized during 2020 is $441750. $387000. $496500. $406500...
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- Dalton Construction Co. contracted to build a bridge for $10,000,000. Construction began in 2021 and was completed in 2022. Data relating to the construction are: Costs incurred during the year Estimated costs to complete Dalton uses the percentage-of-completion method. 2021 $3,300,000 2,700,000 2022 $2,750,000 Instructions (a) How much revenue should be reported for 2021? Show your computation. (b) Make the entry to record progress billings of $4,100,000 during 2021. (c) Make the entry to record the revenue and gross profit for 2021. (d) How much gross profit should be reported for 2022? Show your computation.arrow_forwardOn January 1, 2021, LMT Inc. acquired a piece of land to construct a new office building. You have the following information about this transaction: Price of land $180,000 Tax on purchase of land 5% of price Legal fees to transfer property of land to LMT $4,500 Cost of demolishing old building on land 5,600 Income from sale of windows of old building demolished 500 Cost of new office building foundation 23,400 Cost of office building construction 460,000 Cost of insurance during construction 2,000 Cost to repair a piece of equipment used in the office building’s construction 1,000 Cost of annual insurance on office building after the construction is finished 6,000 LMT management decided to allocate the following amounts to the parts of the office building, and estimated the corresponding useful lives and residual values as follows: Allocated cost Useful life Residual value Windows $50,000 10 years…arrow_forwardOn January 1, 2024, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2025. Expenditures on the project were as follows: January 1, 2024 32 March 1, 2024 June 30, 2024 October 1, 2024 January 31, 2025 April 30, 2025 August 31, 2025 On January 1, 2024, the company obtained a $3 million construction loan with a 10% 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 $4,000,000 and $6,000,000 with interest rates of 6% and 8%, 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. Required: Using the weighted-average interest method, answer the following questions: $ 1,000,000 600,000 800,000 600,000 270,000 585,000 900,000 1.…arrow_forward
- On March 1, 2024, Beldon Corporation purchased land as a factory site for $66,000. An old building on the property was demolished, and construction began on a new building that was completed on December 15, 2024. Costs incurred during this period are listed below: Demolition of old building Architect's fees (for new building) Legal fees for title investigation of land Property taxes on land (for period beginning March 1, 2024) Construction costs Interest on construction loan $ 7,000 18,000 5,000 3,600 560,000 8,000 Salvaged materials resulting from the demolition of the old building were sold for $2,600. Required: Determine the amounts that Beldon should capitalize as the cost of the land and the new building. Complete this question by entering your answers in the tabs below. Cost of Land Cost of New Building Determine the amounts that Beldon should capitalize as the cost of the land. Note: Amounts to be deducted should be indicated with a minus sign. Capitalized cost of land: Total…arrow_forwardMadrigal Company constructed a building for its own use. Construction started on January 3, 2021 and the building was completed on December 31, 2021. Costs incurred during the year were as follows: January 1-P400,000 April 1 - P500,000 August 1 - P480,000 December 1- P180,000 To help finance the construction of the building, the company obtained a two-year, 12% loan of P1,000,000. Prior to the disbursement of the loan proceeds, it was temporarily invested and earned interest income of P15,000. During the year 2021, the company has also general borrowings as follows: 10% Notes Payable, due March 1, 2023 - P1,000,000 12% Notes Payable, due Dec. 31, 2024-P1,500,000 How much interest is capitalized?arrow_forwardOn January 1, 2024, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2025. Expenditures on the project were as follows: January 1, 2024 $ 1,820,000 March 1, 2024 1,440,000 June 30, 2024 1,640,000 October 1, 2024 1,440,000 January 31, 2025 396,000 April 30, 2025 729,000 August 31, 2025 1,026,000 On January 1, 2024, the company obtained a $4,400,000 construction loan with a 14% interest rate. The loan was outstanding all of 2024 and 2025. The company’s other interest-bearing debt included two long-term notes of $2,000,000 and $8,000,000 with interest rates of 10% and 12%, 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. Required: Calculate the amount of interest that Mason should capitalize in 2024 and 2025 using the specific interest method. What is the total cost of the building?…arrow_forward
- Company A entered into a P4,500,000 fixed-price contract with a contractor on March 1, 2019 for the construction of an office building. The building was completed and occupied on September 30, 2020. Additional construction costs were incurred as follows: Plans, specifications and blueprints 18,000 Architect's fees for design and supervision 142,500 The building is estimated to have a 40-year useful life from the date of completion and will be depreciated using the 150%-declining balance method. To finance the construction cost, the company borrowed P4,500,000 on March 1, 2019. The loan is payable in 10 annual installments of P450,000 plus interest at the rate of 10%. The company used part of the loan proceeds for working capital requirements. The Company's average amounts of accumulated building construction expenditures were as follows: For the period March 1 to December 31, 2019 1,350,000 For the period January 1 to September 31, 2020 3,450,000…arrow_forwardRequired information (The following information applies to the questions displayed below) In 2021 the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: 2021 2022 2023 Cost incurred during the year $2,016,000 $2,808,000 $2,613,000 Estimated costs to complete as of year-end 5,184,000 2,376000 0 Billings during the year 2,180,000 2,644,000 5,176,000 Cash collections during the year 1,890,000 2,500,000…arrow_forwardIn early February 2020, Bridgeport Corp. began construction of an addition to its head office building that is expected to take 18 months to complete. The following 2020 expenditures relate to the addition: Feb. 1 Mar. 1 July 1 Dec. 1 Dec. 31 Payment #1 to contractor Payment to architect Payment #2 to contractor Payment #3 to contractor Asset carrying amount $168,000 21,000 64,400 177,000 Amount of interest $ $430,400 On February 1, Bridgeport issued a $102,000, three-year note payable at a rate of 11% to finance most of the initial payment to the contractor. No other asset-specific debt was entered into. Details of other interest-bearing debt during the period are provided in the table below: Other Debt Instruments Outstanding-2020 9%, 15-year bonds, issued May 1, 2005, matured May 1, 2020 6%, 10-year bonds, issued June 15, 2014 6%, 12-year bonds, issued May 1, 2020 Principal amount $303,000 $500,000 $303,000 What amount of interest should be capitalized for the fiscal year ending…arrow_forward
- On January 1, 2024, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2025. Expenditures on the project were as follows: January 1, 2024 March 1, 2024 June 30, 2024 October 1, 2024 January 31, 2025 April 30, 2025 August 31, 2025 $1,000,000 600,000 800,000 600,000 270,000 585,000 900,000 On January 1, 2024, the company obtained a $3 million construction loan with a 10% interest rate. The loan was outstanding all of 2024 and 2025. The company's other interest-bearing debt included two long-term notes of $4,000,000 and $6,000,000 with interest rates of 6% and 8%, 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. 4. Compute the cost to be allocated to the building in 2025 other than Capitalized Interest, Show your computation in the workpaper provided. 4. 1/31/2025 4/30/2025 8/31/2025…arrow_forwardOn January 1, 2020, Miller Construction Company contracted to build a parking lot for the city of St. Louis for $825,000. The following transactions and estimates relate to this contract. Construction costs incurred during 2020 $440,000 $209,000 $192,500 $440,000 Progress billings Cash collections Estimated costs to complete a. Prepare the 2020 journal entry to record profit or loss assuming revenue is recognized over time. Note: Record any multiple debits in alphabetical order and any multiple credits in alphabetical order. a. Account b. To recognize revenues and expenses Account + # + b. Prepare the 2020 journal entry to record profit or loss assuming revenue is recognized at a point in time. Note: If a journal entry (or a line of the journal entry) isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). To recognize revenues and expenses Debit + + Credit Debit Creditarrow_forwardOn January 1, 2020, Miller Construction Company contracted to build a parking lot for the city of St. Louis for $825,000. The following transactions and estimates relate to this contract. Construction costs incurred during 2020 $440,000 Progress billings $209,000 Cash collections $192,500 $440,000 Estimated costs to complete a. Prepare the 2020 journal entry to record profit or loss assuming revenue is recognized over time. Note: Record any multiple debits in alphabetical order and any multiple credits in alphabetical order. a. Account b. To recognize revenues and expenses Account ◆ b. Prepare the 2020 journal entry to record profit or loss assuming revenue is recognized at a point in time. Note: If a journal entry (or a line of the journal entry) isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). To recognize revenues and expenses Debit ♦ Credit Debit Creditarrow_forward
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