The weighted average accumulated expenditure for current year. Given Information: Amount of note payable is $2,800,000 with the interest of 5% and time period of 3 years. Amount of 6% bond payable is $5,000,000. Amount of 9% note payable is $1,000,000. Additional payments in second year amounted to $900,000 and $1,800,000. Line of credit opted to finance operating cycle amounted to $2,400,000.

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Answer 1

Question

Chapter 11, Problem 11.9E

a.

To determine

The weighted average accumulated expenditure for current year.

Given Information:

Amount of note payable is $2,800,000 with the interest of 5% and time period of 3 years.

Amount of 6% bond payable is $5,000,000.

Amount of 9% note payable is $1,000,000.

Additional payments in second year amounted to $900,000 and $1,800,000.

Line of credit opted to finance operating cycle amounted to $2,400,000.

b.

To determine

To determine: To determine: The amount of avoidable interest and actual interest.

Given Information:

Amount of note payable is $2,800,000 with the interest of 5% and time period of 3 years.

Amount of 6% bond payable is $5,000,000.

Amount of 9% note payable is $1,000,000.

Additional payments in second year amounted to $900,000 and $1,800,000.

Line of credit opted to finance operating cycle amounted to $2,400,000.

c.

To determine

The amount of interest to be capitalized and expensed during the year.

d.

To determine

To prepare: The journal entry to record the interest payments.

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Students have asked these similar questions

Metlock Inc. is constructing a building. Construction began on March 1 and was completed on December 31. Expenditures were $624,000 on March 1, $832,000 on July 1, and $748,800 on December 1. Compute Metlock's weighted-average accumulated expenditures for interest capitalization purposes. Weighted-Average Accumulated Expenditures $

Weighted average accumulated expenditures are $400,000 on a project for which work steadily progressed during the current year. The following debt was outstanding during the current year. Construction loan $100,000 at 10% Note payable $500,000 at 8% Mortgage payable $150,000 at 12% a. Compute the weighted average interest rate on the general debt. Calculation of weighted average interest rate Numerator Denominator = Rate General Debt $ Debt Category 0 b. Calculate avoidable interest for the purpose of interest capitalization. Note: Use the interest rate calculated above EXACTLY as shown in your calculations below. . Note: Round dollar amounts to the nearest whole dollar. Specific Debt $ General Debt Calculation of Avoidable Interest Weighted Average $ $ Accumulated Expenditures 0 0 0 Interest Rate Avoidable 0% $ 0% LA $ Interest % 0 0 0

Use the following information for the next two questions: On January 1, 20x1, Entity A had the following general borrowings. A part of the proceeds was used to finance the construction of a qualifying asset: Principal P1,000,000 12% bank loan (1.5 years) 10% bank loan (3-year) P8,000,000 Expenditures made on the qualifying asset were as follows: Jan.1 P 5,000,000 4,000,000 March 1 August 31 December 1 3,000,000 2,000,000 Construction was completed on December 31, 20x1. .How much borrowing costs are capitalized to the cost of the constructed qualifying asset?

Answer 2

Question

Chapter 11, Problem 11.9E

a.

To determine

The weighted average accumulated expenditure for current year.

Given Information:

Amount of note payable is $2,800,000 with the interest of 5% and time period of 3 years.

Amount of 6% bond payable is $5,000,000.

Amount of 9% note payable is $1,000,000.

Additional payments in second year amounted to $900,000 and $1,800,000.

Line of credit opted to finance operating cycle amounted to $2,400,000.

b.

To determine

To determine: To determine: The amount of avoidable interest and actual interest.

Given Information:

Amount of note payable is $2,800,000 with the interest of 5% and time period of 3 years.

Amount of 6% bond payable is $5,000,000.

Amount of 9% note payable is $1,000,000.

Additional payments in second year amounted to $900,000 and $1,800,000.

Line of credit opted to finance operating cycle amounted to $2,400,000.

c.

To determine

The amount of interest to be capitalized and expensed during the year.

d.

To determine

To prepare: The journal entry to record the interest payments.

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Answer 3

Question

Chapter 11, Problem 11.9E

a.

To determine

The weighted average accumulated expenditure for current year.

Given Information:

Amount of note payable is $2,800,000 with the interest of 5% and time period of 3 years.

Amount of 6% bond payable is $5,000,000.

Amount of 9% note payable is $1,000,000.

Additional payments in second year amounted to $900,000 and $1,800,000.

Line of credit opted to finance operating cycle amounted to $2,400,000.

b.

To determine

To determine: To determine: The amount of avoidable interest and actual interest.

Given Information:

Amount of note payable is $2,800,000 with the interest of 5% and time period of 3 years.

Amount of 6% bond payable is $5,000,000.

Amount of 9% note payable is $1,000,000.

Additional payments in second year amounted to $900,000 and $1,800,000.

Line of credit opted to finance operating cycle amounted to $2,400,000.

c.

To determine

The amount of interest to be capitalized and expensed during the year.

d.

To determine

To prepare: The journal entry to record the interest payments.

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Answer 4

Question

Chapter 11, Problem 11.9E

a.

To determine

The weighted average accumulated expenditure for current year.

Given Information:

Amount of note payable is $2,800,000 with the interest of 5% and time period of 3 years.

Amount of 6% bond payable is $5,000,000.

Amount of 9% note payable is $1,000,000.

Additional payments in second year amounted to $900,000 and $1,800,000.

Line of credit opted to finance operating cycle amounted to $2,400,000.

b.

To determine

To determine: To determine: The amount of avoidable interest and actual interest.

Given Information:

Amount of note payable is $2,800,000 with the interest of 5% and time period of 3 years.

Amount of 6% bond payable is $5,000,000.

Amount of 9% note payable is $1,000,000.

Additional payments in second year amounted to $900,000 and $1,800,000.

Line of credit opted to finance operating cycle amounted to $2,400,000.

c.

To determine

The amount of interest to be capitalized and expensed during the year.

d.

To determine

To prepare: The journal entry to record the interest payments.

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Answer 5

Chapter 11, Problem 11.9E

a.

To determine

The weighted average accumulated expenditure for current year.

Given Information:

Amount of note payable is $2,800,000 with the interest of 5% and time period of 3 years.

Amount of 6% bond payable is $5,000,000.

Amount of 9% note payable is $1,000,000.

Additional payments in second year amounted to $900,000 and $1,800,000.

Line of credit opted to finance operating cycle amounted to $2,400,000.

b.

To determine

To determine: To determine: The amount of avoidable interest and actual interest.

Given Information:

Amount of note payable is $2,800,000 with the interest of 5% and time period of 3 years.

Amount of 6% bond payable is $5,000,000.

Amount of 9% note payable is $1,000,000.

Additional payments in second year amounted to $900,000 and $1,800,000.

Line of credit opted to finance operating cycle amounted to $2,400,000.

c.

To determine

The amount of interest to be capitalized and expensed during the year.

d.

To determine

To prepare: The journal entry to record the interest payments.

Answer 6

Chapter 11, Problem 11.9E

a.

To determine

The weighted average accumulated expenditure for current year.

Given Information:

Amount of note payable is $2,800,000 with the interest of 5% and time period of 3 years.

Amount of 6% bond payable is $5,000,000.

Amount of 9% note payable is $1,000,000.

Additional payments in second year amounted to $900,000 and $1,800,000.

Line of credit opted to finance operating cycle amounted to $2,400,000.

Answer 7

Chapter 11, Problem 11.9E

a.

To determine

The weighted average accumulated expenditure for current year.

Given Information:

Amount of note payable is $2,800,000 with the interest of 5% and time period of 3 years.

Amount of 6% bond payable is $5,000,000.

Amount of 9% note payable is $1,000,000.

Additional payments in second year amounted to $900,000 and $1,800,000.

Line of credit opted to finance operating cycle amounted to $2,400,000.

Answer 8

b.

To determine

To determine: To determine: The amount of avoidable interest and actual interest.

Given Information:

Amount of note payable is $2,800,000 with the interest of 5% and time period of 3 years.

Amount of 6% bond payable is $5,000,000.

Amount of 9% note payable is $1,000,000.

Additional payments in second year amounted to $900,000 and $1,800,000.

Line of credit opted to finance operating cycle amounted to $2,400,000.

Answer 9

b.

To determine

To determine: To determine: The amount of avoidable interest and actual interest.

Given Information:

Amount of note payable is $2,800,000 with the interest of 5% and time period of 3 years.

Amount of 6% bond payable is $5,000,000.

Amount of 9% note payable is $1,000,000.

Additional payments in second year amounted to $900,000 and $1,800,000.

Line of credit opted to finance operating cycle amounted to $2,400,000.

Answer 10

c.

To determine

The amount of interest to be capitalized and expensed during the year.

Answer 11

c.

To determine

The amount of interest to be capitalized and expensed during the year.

Answer 12

d.

To determine

To prepare: The journal entry to record the interest payments.

Answer 13

d.

To determine

To prepare: The journal entry to record the interest payments.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 11 - Stephen J. Cosgrove is the Former Vice President....Ch. 11 - Prob. 11.2Q Ch. 11 - Prob. 11.3Q Ch. 11 - Prob. 11.4Q Ch. 11 - Will the expense/capitalization choice impact...Ch. 11 - Prob. 11.6Q Ch. 11 - Prob. 11.7Q Ch. 11 - For a long-lived operating asset acquired by...Ch. 11 - Prob. 11.9Q Ch. 11 - Prob. 11.10Q

Solution Summary: The author concludes that the weighted average accumulated expenditure (WAEE) for current year is 7,670,813.

The amount of interest to be capitalized and expensed during the year.

To prepare: The journal entry to record the interest payments.

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Chapter 11 Solutions