Pronghorn Furniture Company started construction of a combination office and warehouse building for its own use at
Question:
Pronghorn Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $4,972,800on January 1, 2017.Pronghornexpected to complete the building by December 31, 2017.Pronghornhas the following debt obligations outstanding during the construction period.
Construction loan-10% interest, payable semiannually, issued December 31, 2016$2,019,500
Short-term loan-8% interest, payable monthly, and principal payable at maturity on May 30, 20181,605,600
Long-term loan-9% interest, payable on January 1 of each year. Principal payable on January 1, 20211,001,000
Assume that Pronghorn completed the office and warehouse building on December 31, 2017, as planned at a total cost of $5,192,000, and the weighted-average amount of accumulated expenditures was $3,827,600.
Compute the avoidable interest on this project.(Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final answers to 0 decimal places, e.g. 5,275.)
Intermediate Accounting
ISBN: 978-1118147290
15th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield