1.Windsor Company is constructing a building. Construction began on February 1 a
ID: 2571433 • Letter: 1
Question
1.Windsor Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $2,076,000 on March 1, $1,224,000 on June 1, and $3,056,900 on December 31.
Windsor Company borrowed $1,115,600 on March 1 on a 5-year, 13% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 5-year, $2,074,900 note payable and an 11%, 4-year, $3,717,000 note payable. Compute avoidable interest for Windsor Company. Use the weighted-average interest rate for interest capitalization purposes. (Round percentages to 2 decimal places, e.g. 2.51% and final answer to 0 decimal places, e.g. 5,275.)
Avoidable interest $
2.Larkspur Corporation owns machinery that cost $28,000 when purchased on July 1, 2014. Depreciation has been recorded at a rate of $3,360 per year, resulting in a balance in accumulated depreciation of $11,760 at December 31, 2017. The machinery is sold on September 1, 2018, for $14,700.
Prepare journal entries to (a) update depreciation for 2018 and (b) record the sale. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
No.
Account Titles and Explanation
Debit
Credit
(a)
(b)
No.
Account Titles and Explanation
Debit
Credit
(a)
(b)
Explanation / Answer
ans 1 Date Expenditure Months Weighted avg 1-Mar $2,076,000 10/12 $1,730,000 1-Jun 1224000 7/12 714000 31-Dec 3056900 0 0 weighetd avg $2,444,000 Amt Int rate Interest for 9 months Specific loan 1115600 13% 108771 Non specific loan $1,328,400 10.64% 106006 Interest 214777.32 weighted avg interest Amt Int rate Interest for 12 months Notes payable 2074900 10% 207490 Notes payable 3717000 11% 408870 5791900 616360 weighted int raye 10.64 616360/5791900*100 Avoidable Interest 214777 ans ans 2 Accounts Title Dr Cr a) Depreciation exp 2240 Accumulated depreciation-Machinery 2240 (3360*8/12) b) Cash 14700 Accumulated depreciation-Machinery 14000 (11760+2240) Gain on sale of Machinery 700 Machinery 28000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.