Interest Capitalization #1.xlsx

	B	C	D	E	G	H	I	J	K	L	M	N	O
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2	Interest Capitalization
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4		ABC Corporation began construction on their new warehouse on March 1, 20X2. Expenditures for this construction were as follows:
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7			March 1, 20X2			$900,000
8			May 1, 20X2			$600,000
9			October 1, 20X2			$700,000
10			December 1, 20X2			$300,000
11			December 31, 20X2			$100,000
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13		On March 1, 20X2, the company issued a $1,000,000, 6%, 4-year bond to finance the construction. Interest is payable annually on March 1st. Other outstanding debt during the year was as follows:
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16			$2,000,000, 7%, 8-year note issued January 1, 20X1, interest payable annually on January 1st.
17			$3,000,000, 4.5%, 10-year bond issued January 1, 20X2, interest payable annually on January 1st.
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19		Construction was not completed until 20X3. Prepare the necessary adjusting entry for interest on December 31, 20X2.
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23		1) Calculate actual interest for the year.
24						I	=	P	X	R	X	T
25			Specific debt - bond
26			Other debt - note
27			Other debt - bond
28						$0
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30		2) Calculate the weighted average capital expenditures.
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32			March 1, 20X2							$0
33			May 1, 20X2							$0
34			October 1, 20X2							$0
35			December 1, 20X2							$0
36			December 31, 20X2							$0
37										$0
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39		3) Calculate interest on weighted average capital expenditures.
40										Weighted-average interest rate - Other Debt
41				X	=	$0.00				Total Interest		Total Principal
42				X	=	$0.00
43						$0.00
44										$0		$0	#DIV/0!
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46		4) Prepare the necessary adjusting entry on December 31, 20X2.
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48			12/31
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53	www.TLCTutoringCompany.com
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