1 answer

Help please O t 2018, the Mason Manufacturing Company began construction of a building to be...

Question:

help please O t 2018, the Mason Manufacturing Company began construction of a building to be used as its office en The bug wa
2. Calculate the amount of interest expense that appear in the 201 2 < Prev 2013 Next > On January 2018, the company ined a 3
2. Calculate the amount of interest expense that appear in the 201 2 < Prev 2 3 III Next > On January 2018, the company obtai
help please O t 2018, the Mason Manufacturing Company began construction of a building to be used as its office en The bug was completed on September 30, 2019 Expenditures on the project were as follows: G . January 1, 2018 March 1, 2018 June 10, 2018 October 1, 2018 January 31, 2019 April , 2019 August 31, 2019 51,070,000 340,000 380,000 710,000 1,170,000 1,485,000 2,700,000 On January 1, 2018, the company obtained a $3 million construction loan with a 14% Interest rate. The loan was outstanding all of 2018 and 2019. The company's other interest-bearing debt included two long-term notes of $6,000,000 and 58,000,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during all of 2018 and 2019. Interest is paid annually on all debt. The company's fiscal year-end is December 31. Assume the $3 million loan is not specifically tied to construction of the building. Required: 1. Calculate the amount of interest that Mason should capitalize in 2018 and 2019 using the weighted average method. 2. What is the total cost of the building? 3. Calculate the amount of interest expense that will appear in the 2018 and 2019 income statements
2. Calculate the amount of interest expense that appear in the 201 2 < Prev 2013 Next > On January 2018, the company ined a 3 m on construction loan with a 13 interest rate. The loan was outstanding all of 2018 and 2019. The company's other interest-bearing debt included two long term notes of $6.000.000 and 58.000.000 with interest rates of 8 and 10% respectively. Both notes were outstanding during all of 2018 and 2019 interest is paid annually on all debt. The company's fiscal year-end is December 31. Assume the $3 million loan not specifically tied to construction of the building Required: 1. Calculate the amount of interest that Mason should capitalize in 2018 and 2019 using the weighted average method 2. What is the total cost of the building? 3. Calculate the amount of interest expense that will appear in the 2018 and 2019 income statements Complete this question by entering your answers in the tabs below. Reg 1 and 3 Reg 2 Calculate the amount of interest that Mason should capitalize in 2018 and 2019 using the weighted average method and interest expense that will appear in the 2018 and 2019 income statements. (Do not round your intermediate calculations. Round your answers to the nearest whole dollar.) 2018 2019 Interest capitalized Interest expense
2. Calculate the amount of interest expense that appear in the 201 2 < Prev 2 3 III Next > On January 2018, the company obtained a m on construction loan with a 13 interest rate. The loan was outstanding all of 2018 and 2019. The company's other interest-bearing debt included two long term notes of $6.000 000 and $8.000.000 with interest rates of B and 10% respectively. Both notes were outstanding during all of 2018 and 2019 interest is paid annually on all debt. The company's fiscal year end is December 31. Assume the $3 million loans not specifically tied to construction of the building Required: 1. Calculate the amount of interest that Mason should capitalize in 2018 and 2019 using the weighted average method 2. What is the total cost of the building? 3. Calculate the amount of interest expense that will appear in the 2018 and 2019 income statements Complete this question by entering your answers in the tabs below. Reg 1 and ) Reg 2 Calculate the amount of interest that Mason should capitalize in 2018 and 2019 using the weighted average method and interest expense that will appear in the 2018 and 2019 income statements. (Do not round your intermediate calculations. Round your answers to the nearest whole dollar.) 2018 2019 Interest capitalized Interest expense

Answers

2018 2019
Interest Capitalized $              2,13,750 $   4,03,406
Interest Expense $            14,86,250 $ 12,96,594
Total cost of building $            89,72,156
Workings:
Weighted Average rate of all debt:-
$            30,00,000 X 14% = $          4,20,000
$            60,00,000 X 8% = $          4,80,000
$            80,00,000 X 10% = $          8,00,000
$        1,70,00,000 $       17,00,000
Weighted Average rate of all debt = 10.00%
($1700000/ $17000000)
Expenditure for 2018
Jan 1,2018 $            10,70,000 X 12/12 = $       10,70,000
March 1, 2018 $              8,40,000 X 10/12 = $          7,00,000
June 30, 2018 $              3,80,000 X 6/12 = $          1,90,000
October 1, 2018 $              7,10,000 X 3/12 = $          1,77,500
$            30,00,000 $       21,37,500
Interest Capitalized in 2018
$            21,37,500 X 10.00% = $          2,13,750
Expenditure for 2019
Jan 1, 2019 ($3000000 + $213750) $            32,13,750 X 9/9 = $       32,13,750
Jan 31, 2019 $            11,70,000 X 8/9 = $       10,40,000
April 30, 2019 $            14,85,000 X 5/9 = $          8,25,000
August 31. 2019 $            27,00,000 X 1/9 = $          3,00,000
$            85,68,750 $       53,78,750
Interest Capitalized in 2019
$                      53,78,750 X 10.00% X 9/12 = $          4,03,406
Cost of Building
Expenditure for 2018 = $       30,00,000
Interest Capitalized in 2018 = $          2,13,750
Expenditure for 2019 = $       53,55,000
Interest Capitalized in 2019 = $          4,03,406
Total cost of building = $       89,72,156
Interest Expense for 2018:
Total Interest Incurred = $       17,00,000
Less : Interest Capitalized = $          2,13,750
2018 Expense = $       14,86,250
Interest Expense for 2019:
Total Interest Incurred = $       17,00,000
Less : Interest Capitalized = $          4,03,406
2019 Expense = $       12,96,594
.

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