Rolling Blackout Power Company constructed a new power plant to supply energy to the Northeast Electrical Grid.
Question:
Debt Instrument and Purpose Amount
8% Note Payable: Used to finance the power plant construction project …….$ 2,000,000 12% Bond Payable: Used to finance maintenance of local transmitters…........ $ 1,800,000 13% Note Payable: Used to finance construction of corporate headquarters….$ 4,200,000
Required
a. Compute the amount of interest to be capitalized for the current year.
b. Compute the amount of interest to be expensed in the current year.
c. Prepare the journal entry to record the cash interest payments for the current year. Assume that all interest is paid at the end of the year and any interest capitalized is debited to the Construction in Progress account.
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Related Book For
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
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