Question
In: Accounting
On January 1, 2021, the Mason Manufacturing Company began construction of a building to be used...
On January 1, 2021, the Mason Manufacturing Company began
construction of a building to be used as its office headquarters.
The building was completed on September 30, 2022. Expenditures on
the project were as follows:
| January 1, 2021 | $ | 1,090,000 | |
| March 1, 2021 | 780,000 | ||
| June 30, 2021 | 980,000 | ||
| October 1, 2021 | 780,000 | ||
| January 31, 2022 | 297,000 | ||
| April 30, 2022 | 630,000 | ||
| August 31, 2022 | 927,000 | ||
On January 1, 2021, the company obtained a $3,300,000 construction
loan with a 16% interest rate. The loan was outstanding all of 2021
and 2022. 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 2021 and 2022. Interest is paid annually on all debt. The
company’s fiscal year-end is December 31.
What I need solved:
1. Please help me calculate the amount of interest
that Mason should capitalize in 2021 and 2022 using the specific
interest method.
2. Help me find the total cost of the
building?
3. Calculate the amount of interest expense that
will appear in the 2021 and 2022 income statements.
Solutions
Expert Solution
Workings:
Workings:
Workings:
Workings:
Workings:
Answer to Question 1, 2 and 3:
ekkarill92 answered 2 years agoRelated Solutions
On January 1, 2021, the Mason Manufacturing Company began construction of a building to be used...
On January 1, 2021, the Mason Manufacturing Company began
construction of a building to be used as its office headquarters.
The building was completed on September 30, 2022. Expenditures on
the project were as follows: January 1, 2021 $ 2,020,000 March 1,
2021 1,740,000 June 30, 2021 1,940,000 October 1, 2021 1,740,000
January 31, 2022 441,000 April 30, 2022 774,000 August 31, 2022
1,071,000 On January 1, 2021, the company obtained a $4,900,000
construction loan with a 12% interest rate....
On January 1, 2021, the Mason Manufacturing Company began construction of a building to be used...
On January 1, 2021, the Mason Manufacturing Company began
construction of a building to be used as its office headquarters.
The building was completed on September 30, 2022. Expenditures on
the project were as follows:
January 1, 2021 $ 1,680,000
March 1, 2021 1,260,000
June 30, 2021 1,460,000
October 1, 2021 1,260,000
January 31, 2022 369,000
April 30, 2022 702,000
August 31, 2022 999,000
On January 1, 2021, the company obtained a $4,000,000
construction loan with a 12% interest rate....
On January 1, 2021, the Mason Manufacturing Company began construction of a building to be used...
On January 1, 2021, the Mason Manufacturing Company began
construction of a building to be used as its office headquarters.
The building was completed on September 30, 2022. Expenditures on
the project were as follows:
January 1, 2021
$
1,200,000
March 1, 2021
900,000
June 30, 2021
1,100,000
October 1, 2021
900,000
January 31, 2022
315,000
April 30, 2022
648,000
August 31, 2022
945,000
On January 1, 2021, the company obtained a $3,500,000 construction
loan with a 12% interest rate....
On January 1, 2021, the Mason Manufacturing Company began construction of a building to be used...
On January 1, 2021, the Mason Manufacturing Company began
construction of a building to be used as its office headquarters.
The building was completed on September 30, 2022. Expenditures on
the project were as follows:
January 1, 2021
$
1,820,000
March 1, 2021
1,440,000
June 30, 2021
1,640,000
October 1, 2021
1,440,000
January 31, 2022
396,000
April 30, 2022
729,000
August 31, 2022
1,026,000
On January 1, 2021, the company obtained a $4,400,000
construction loan with a 14% interest rate....
On January 1, 2021, the Mason Manufacturing Company began construction of a building to be used...
On January 1, 2021, the Mason Manufacturing Company began
construction of a building to be used as its office headquarters.
The building was completed on September 30, 2022. Expenditures on
the project were as follows:
January 1, 2021
$
1,940,000
March 1, 2021
1,680,000
June 30, 2021
1,880,000
October 1, 2021
1,680,000
January 31, 2022
432,000
April 30, 2022
765,000
August 31, 2022
1,062,000
On January 1, 2021, the company obtained a $4,800,000 construction
loan with a 14% interest rate....
On January 1, 2021, the Mason Manufacturing Company began construction of a building to be used...
On January 1, 2021, the Mason Manufacturing Company began
construction of a building to be used as its office headquarters.
The building was completed on September 30, 2022. Expenditures on
the project were as follows:
January 1, 2021
$
1,350,000
March 1, 2021
1,080,000
June 30, 2021
1,280,000
October 1, 2021
1,080,000
January 31, 2022
342,000
April 30, 2022
675,000
August 31, 2022
972,000
On January 1, 2021, the company obtained a $3,800,000 construction
loan with a 15% interest rate....
On January 1, 2021, the Mason Manufacturing Company began construction of a building to be used...
On January 1, 2021, the Mason Manufacturing Company began
construction of a building to be used as its office headquarters.
The building was completed on September 30, 2022. Expenditures on
the project were as follows:
January 1, 2021 $ 1,500,000
March 1, 2021 1,200,000
June 30, 2021 1,400,000
October 1, 2021 1,200,000
January 31, 2022 360,000
April 30, 2022 693,000
August 31, 2022 990,000
On January 1, 2021, the company obtained a $4,000,000
construction loan with a 14% interest rate....
On January 1, 2021, the Mason Manufacturing Company began construction of a building to be used...
On January 1, 2021, the Mason Manufacturing Company began
construction of a building to be used as its office headquarters.
The building was completed on September 30, 2022. Expenditures on
the project were as follows:
January 1, 2021
$
2,020,000
March 1, 2021
1,740,000
June 30, 2021
1,940,000
October 1, 2021
1,740,000
January 31, 2022
441,000
April 30, 2022
774,000
August 31, 2022
1,071,000
On January 1, 2021, the company obtained a $4,900,000 construction
loan with a 12% interest rate....
On January 1, 2021, the Mason Manufacturing Company began construction of a building to be used...
On January 1, 2021, the Mason Manufacturing Company began
construction of a building to be used as its office headquarters.
The building was completed on September 30, 2022. Expenditures on
the project were as follows:
January 1, 2021
$
1,820,000
March 1, 2021
1,440,000
June 30, 2021
1,640,000
October 1, 2021
1,440,000
January 31, 2022
396,000
April 30, 2022
729,000
August 31, 2022
1,026,000
On January 1, 2021, the company obtained a $4,400,000 construction
loan with a 14% interest rate....
On January 1, 2018, the Mason Manufacturing Company began construction of a building to be used...
On January 1, 2018, the Mason Manufacturing Company began
construction of a building to be used as its office headquarters.
The building was completed on September 30, 2019.
Expenditures on the project were as follows:
January 1, 2018
$
2,020,000
March 1, 2018
1,740,000
June 30, 2018
1,940,000
October 1, 2018
1,740,000
January 31, 2019
441,000
April 30, 2019
774,000
August 31, 2019
1,071,000
On January 1, 2018, the company obtained a $4,900,000 construction
loan with a 12% interest rate....
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