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##### During 2012, ABC company finished construction of a new warehouse

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Question;1. During 2012, ABC company finished construction of a new warehouse. Construction began on 1/1/2011. The cost of the new warehouse was \$3,000,000 with the cost incurred evenly throughout the construction. The following information is provided:ABC Co. incremental interest rate is 10%Actual interest rate during 2012 was \$135,000The average accumulated expenditures was \$1,500,000Requirement:A.How much interest should be calculated?B.What is the entry to capitalize the interest?2.During 2012 XYZ company began and completed a small warehouse.Construction on the warehouse began on 1/2/2012.Expenditures were made as follows:January 2 \$1,000,000March 1 \$900,000July 1 \$400,000Oct 1 \$800,000XYZ financed the project by issuing \$1,000,000 in stock at the beginning of 2012 and borrowed \$1,200,000 from the bank at an interest rate of 8%. In addition the company had the following debt:\$1,000,000, interest rate of 9% borrowed in 2010,\$2,000,000,11% note borrowed in 2009.Both of the debts are due in 2015.Requirement:A.Calculated the 2012 Weighted Average Accumulated ExpendituresB.How much is avoidable interestC.How much is actual interestD.Make the entry capitalizing the interest in 2012.

Paper#44123 | Written in 18-Jul-2015

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