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. The loan was outstanding all of 2021
and 2022. The company’s other interest-bearing debt included two
long-term notes of $4,000,000 and $6,000,000 with interest rates of
8% and 10%, 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:
1. Calculate the amount of interest that Mason
should capitalize in 2021 and 2022 using the specific interest
method.
2. What is the total cost of the building?
3. Calculate the amount of interest expense that
will appear in the 2021 and 2022 income statements.
In: Accounting
Home Builder Supply, a retailer in the home improvement industry, currently operates seven retail outlets in Georgia and South Carolina. Management is contemplating building an eighth retail store across town from its most successful retail outlet. The company already owns the land for this store, which currently has an abandoned warehouse located on it. Last month, the marketing department spent $ 15,000 on market research to determine the extent of customer demand for the new store. Now Home Builder Supply must decide whether to build and open the new store. Which of the following should be included as part of the incremental earnings for the proposed new retail store?
a. The original purchase price of the land where the store will be located.
b. The cost of demolishing the abandoned warehouse and clearing the lot.
c. The loss of sales in the existing retail outlet, if customers who previously drove across town to shop at the existing outlet become customers of the new store instead.
d. The
$ 15,000
in market research spent to evaluate customer demand.
e. Construction costs for the new store.
f. The value of the land if sold.
g. Interest expense on the debt borrowed to pay the construction costs.
In: Finance
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 $ 1,200,000 March 1, 2018 900,000 June 30, 2018 1,100,000 October 1, 2018 900,000 January 31, 2019 315,000 April 30, 2019 648,000 August 31, 2019 945,000 On January 1, 2018, the company obtained a $3,500,000 construction loan with a 12% interest rate. The loan was outstanding all of 2018 and 2019. The company’s other interest-bearing debt included two long-term notes of $3,000,000 and $7,000,000 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. Required: 1. Calculate the amount of interest that Mason should capitalize in 2018 and 2019 using the specific interest 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.
In: Accounting
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. The loan was outstanding all of 2021 and 2022. The company’s other interest-bearing debt included two long-term notes of $1,000,000 and $4,000,000 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.
Required:
1. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the specific interest method.
2. What is the total cost of the building?
3.Calculate the amount of interest expense that will appear in the 2021 and 2022 income statements.
In: Accounting
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 | $ | 1,050,000 | |
| March 1, 2018 | 870,000 | ||
| June 30, 2018 | 390,000 | ||
| October 1, 2018 | 690,000 | ||
| January 31, 2019 | 675,000 | ||
| April 30, 2019 | 990,000 | ||
| August 31, 2019 | 1,710,000 | ||
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 $4,900,000 and $6,900,000 with interest rates of
5% and 7%, 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.
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.
In: Accounting
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 $ 1,090,000 March 1, 2018 780,000 June 30, 2018 980,000 October 1, 2018 780,000 January 31, 2019 297,000 April 30, 2019 630,000 August 31, 2019 927,000 On January 1, 2018, the company obtained a $3,300,000 construction loan with a 16% interest rate. The loan was outstanding all of 2018 and 2019. 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 2018 and 2019. Interest is paid annually on all debt. The company’s fiscal year-end is December 31. Required: 1. Calculate the amount of interest that Mason should capitalize in 2018 and 2019 using the specific interest 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.
In: Accounting
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 | $ | 1,090,000 | |
| March 1, 2018 | 780,000 | ||
| June 30, 2018 | 980,000 | ||
| October 1, 2018 | 780,000 | ||
| January 31, 2019 | 297,000 | ||
| April 30, 2019 | 630,000 | ||
| August 31, 2019 | 927,000 | ||
On January 1, 2018, the company obtained a $3,300,000 construction
loan with a 16% interest rate. The loan was outstanding all of 2018
and 2019. 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 2018 and 2019. Interest is paid annually on all debt. The
company’s fiscal year-end is December 31.
Required:
1. Calculate the amount of interest that Mason
should capitalize in 2018 and 2019 using the specific interest
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.
In: Accounting
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 $ 2,050,000 March 1, 2018 1,800,000 June 30, 2018 2,000,000 October 1, 2018 1,800,000 January 31, 2019 450,000 April 30, 2019 783,000 August 31, 2019 1,080,000 On January 1, 2018, the company obtained a $5,000,000 construction loan with a 9% 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 $9,000,000 with interest rates of 5% and 8%, 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. Required: 1. Calculate the amount of interest that Mason should capitalize in 2018 and 2019 using the specific interest 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.
In: Accounting
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 | $ | 1,240,000 | |
| March 1, 2018 | 660,000 | ||
| June 30, 2018 | 450,000 | ||
| October 1, 2018 | 650,000 | ||
| January 31, 2019 | 900,000 | ||
| April 30, 2019 | 1,215,000 | ||
| August 31, 2019 | 2,160,000 | ||
On January 1, 2018, the company obtained a $3 million construction
loan with a 12% interest rate. The loan was outstanding all of 2018
and 2019. The company’s other interest-bearing debt included two
long-term notes of $5,400,000 and $7,400,000 with interest rates of
6% and 8%, 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.
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.
In: Accounting
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 | $ | 1,000,000 | |
| March 1, 2018 | 600,000 | ||
| June 30, 2018 | 800,000 | ||
| October 1, 2018 | 600,000 | ||
| January 31, 2019 | 270,000 | ||
| April 30, 2019 | 585,000 | ||
| August 31, 2019 | 900,000 | ||
On January 1, 2018, the company obtained a $3 million construction
loan with a 10% interest rate. The loan was outstanding all of 2018
and 2019. 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
2018 and 2019. Interest is paid annually on all debt. The company’s
fiscal year-end is December 31.
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.
In: Accounting