On July 31, 2017, Sunland Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction was begun immediately and was completed on November 1, 2017. To help finance construction, on July 31 Sunland issued a $322,800, 3-year, 12% note payable at Netherlands National Bank, on which interest is payable each July 31. $222,800 of the proceeds of the note was paid to Minsk on July 31. The remainder of the proceeds was temporarily invested in short-term marketable securities (trading securities) at 10% until November 1. On November 1, Sunland made a final $100,000 payment to Minsk. Other than the note to Netherlands, Amsterdam’s only outstanding liability at December 31, 2017, is a $32,800, 8%, 6-year note payable, dated January 1, 2014, on which interest is payable each December 31.

(a)

Calculate the interest revenue, weighted-average accumulated expenditures, avoidable interest, and total interest cost to be capitalized during 2017.

Interest revenue (322,800-222,800)*.1/(12/3) = $2500

Weighted-average accumulated expenditures (222,800/(12/3)) = $ 55700

Avoidable interest (55,700*.12) = $ 6684On July 31, 2017, Sunland Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction was begun immediately and was completed on November 1, 2017. To help finance construction, on July 31 Sunland issued a $322,800, 3-year, 12% note payable at Netherlands National Bank, on which interest is payable each July 31. $222,800 of the proceeds of the note was paid to Minsk on July 31. The remainder of the proceeds was temporarily invested in short-term marketable securities (trading securities) at 10% until November 1. On November 1, Sunland made a final $100,000 payment to Minsk. Other than the note to Netherlands, Amsterdam’s only outstanding liability at December 31, 2017, is a $32,800, 8%, 6-year note payable, dated January 1, 2014, on which interest is payable each December 31.

(a)

Calculate the interest revenue, weighted-average accumulated expenditures, avoidable interest, and total interest cost to be capitalized during 2017.

Interest revenue (322,800-222,800)*.1/(12/3) = $2500

Weighted-average accumulated expenditures (222,800/(12/3)) = $ 55700

Avoidable interest (55,700*.12) = $ 6684

Interest capitalized $

​Please show math

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Status NEW Posted 12 Jul 2017 12:07 AM My Price 10.00

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