Capitalized Interest (LIVELY ACE Ch 9 Pt 2) On January 1, Year 1, Romano Tire Service,...

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Capitalized Interest (LIVELY ACE Ch 9 Pt 2) On January 1, Year 1, Romano Tire Service, Inc. signed a contract to have a new service center built for $900,000. On the same day, Romano borrowed $400,000 to finance the construction. This is an annual loan at a stated rate of 10%. Other Debt existing on the books as of January 1, Year 1: 1) $ 500,000 @ 9% 2) $1,000,000 @ 12% Expenditures made on the project during Year 1 were as follows: 1/1 $600,000 10/1 $200,000 $800,000 1) How much interest should be capitalized? Support how you came to that conclusion. Record the journal entry to capitalize interest and pay interest for the year. Capitalized Interest (LIVELY ACE Ch 9 Pt 2) On January 1, Year 1, Romano Tire Service, Inc. signed a contract to have a new service center built for $900,000. On the same day, Romano borrowed $400,000 to finance the construction. This is an annual loan at a stated rate of 10%. Other Debt existing on the books as of January 1, Year 1: 1) $ 500,000 @ 9% 2) $1,000,000 @ 12% Expenditures made on the project during Year 1 were as follows: 1/1 $600,000 10/1 $200,000 $800,000 1) How much interest should be capitalized? Support how you came to that conclusion. Record the journal entry to capitalize interest and pay interest for the year.

Answer rating: 100% (QA)

Romano Tire Service Capitalized Interest Year 1 1 Amount of Interest to Capitalize Romano Tire Service should capitalize interest on the construction ... View the full answer