Evaluate the total cost of the building

Assignment Help Financial Accounting

Reference no: EM139972

On January 1, 2008, the Jonathan Company began construction of a new building to be used as its office headquarters. The building was completed and ready for use on September 30, 2009.

3-Jan-08	$1,000,000
1-Mar-08	600,000
30-Jun-08	800,000
1-Oct-08	600,000
31-Jan-09	270,000
30-Apr-09	585,000
31-Aug-09	900,00

Expenditures on construction were as follows:

On January 2, 2008, the company obtained a $3,000,000 construction loan with a 10% interest rate. The loan was outstanding all of 2008 and 2009. The company's other interest-bearing debt consisted of two long-term notes of $4,600,000 and $6,000,000 with interest rates of 6% and 8%, respectively. Both notes were outstanding all of 2008 and 2009. The company's fiscal year end is December 31.

Required: Show your work.

a. Calculate the amount of interest Jonathan should capitalize as part of the cost of the building in 2008 and 2009.

b. What is the total cost of the building?

Calculate the amount of interest expense that will appear on the 2008 and 2009 income statements.

Reference no: EM139972

Questions Cloud

Evaluate the carrying amount of each asset category : Purpose journal entries to record each of the transactions above. Evaluate the carrying amount of each asset category at the end of 2009?

Balanced scorecard with your employer : Please answer the following question about the "IT" work.

Unconstitutional violation of the first amendment protection : Provide an opinion as to whether the City of Ignatius's ordinance was an unconstitutional violation of the First Amendment protection of free speech.

Experience or situation : In brief describe a situation where you or another person remembered an experience or situation differently.

Evaluate the total cost of the building : Determine the amount of interest Jonathan should capitalize as part of the cost of the building in 2008 and 2009. Evaluate the total cost of the building?

Relationship between marketing also financial management : Illustrates the relationship between Marketing also Financial Management.

Change in accounting estimate : A change in an accounting estimate is: how much depreciation expense should the company recognize on December 31, 2010?

Posthypnotic amnesia concept : Posthypnotic amnesia refers to the hypnotic subjects’ inability to recall:

Evaluate owner''s equity at the end of 2008 and 2009 : Evaluate owner's equity at the end of 2008 and 2009? and If Nobel paid dividends of $100 in 2009, and made no stock issues. what must have been net income during the year?

User Account

All Pages