#$3$ Computing Interest Capitalization Amounts Whit Company spent a total of $$540,000$ cash on a construction project during Year $1$ and Year $2.$ During Year $3,$ Whit spends an additional $$1,080,000$ evenly during the year on the project and completes construction at the end of Year $3.$ Debt outstanding during Year $3$ follows. Debt Amount Accounts payable average balance $$90,00010\%$ bond payable $1,260,00012\%$ construction loan $360,000$ a$.$ Compute the amount of interest to be capitalized in Year $3.$ b$.$ Calculate the amount of interest to expense in Year $3.$

#$4$ Computing and Recording Interest Capitalization Weld Corporation is constructing a plant for its own use. Weld capitalizes interest on an annual basis. The following expenditures are made during the current year: January $1,$ $$90,000$; July $1,$ $$870,000$; September $1,$ $$2,400,000$; and December $31,$ $$6,330,000.$ The following debts were outstanding throughout the current year. Debt Amount Construction note, $12\%$ $$300,000$ Short$-$term note payable, $15\%1,200,000$ Accounts payable $($noninterest$-$bearing$)1,200,000$ Note: Round all of your answers to the nearest whole number or whole percentage point. a$.$ Compute the amount of interest to be capitalized during the year. Amount of interest to be capitalized during the year: $Answer $26$ b$.$ Calculate the amount of interest expense for the year. $Answer $27$ c$.$ Prepare the summary journal entry for the year to record the construction expenditures and interest, assuming that construction is not complete on December $31.$ Assume all payments are in cash. c dec$31$ construction in process interest expense cash #$5.$ Computing and Recording Interest Capitalization Bullock Company is constructing a building for its own use and has been capitalizing interest based on average expenditures on a quarterly basis since the project began last year. The following expenditures are made during the first quarter: January $1,$ $$3,360,000$; February $1,$ $$3,060,000$; and March $31,$ $$4,380,000.$ Bullock had the following debts outstanding during this quarter. Debt Amount Note payable, $10\%,$ incurred specifically to finance construction $$1,920,000$ Short$-$term note payable, $15\%3,000,000$ Mortgage note payable, $8\%1,440,000$ a$.$ Compute $(1)$ interest to be capitalized and $(2)$ interest to be expensed for this first quarter. $1.$ Capitalized Interest $2.$ Interest expense b$.$ Prepare the entry to record the construction expenditures and the interest for the first quarter.$$Assume all payments are in cash. construction in process interest expense cash

#$7$ Manchester Company sells equipment on June $1$ of the current year for $$333,600$ cash. Manchester incurred $$1,920$ of removal and selling costs on disposal. The equipment cost $$600,000$ when it was purchased on January $2,$ approximately three years and five months earlier. Its estimated residual value and useful life were $$96,000$ and $10$ years, respectively. Manchester uses straight$-$line depreciation and records annual depreciation on each December $31.$ a$.$ Prepare the journal entries needed to record the asset disposal on June $1,$ of the current year. Hint: First record the update for depreciation expense. b$.$ Record the journal entries if the equipment were abandoned $($zero fair value$)$ on June $1,$ of the current year. Hint: First record the update for depreciation expense.

#$8$ Recording Fixed Asset Disposal On April $1,$ one of two large production machines used by Evert Company stripped a gear, causing major internal damage. On April $5,$ the company decided to purchase a new machine $($cost of $$474,500)$ so that production could continue. The old machine had the following account balances on January $1$: original cost, $$234,000$; accumulated depreciation, $$163,800(20-$year life; no residual value$).$ The company rejected a trade$-$in o$$er of $$35,100.$ Instead, the old machine was sold on April $5$ to another company for $$62,400.$ Evert spent $$7,800$ on cleaning and $$2,600$ on moving the old machine prior to shipping. Insurance premiums $($prepaid$)$ on the old machine were $$1,170$; the unused portion of the premium is applied to the new machine for the same coverage and cost. That insurance was paid on January $1$ and covered the period January $1$ through December $31.$ a$.$ Record the entry for Evert Company to purchase equipment on April $5.$ b$.$ Record the entries for Evert Company on April $5$ to dispose of the old machine, including any required updates for depreciation and for insurance expense. Note: Round answers to the nearest whole dollar.

#$9.$ Recording Asset Exchanges Miley Corp. exchanges old equipment that costs $$28,000($accumulated depreciation of $$12,600)$ for new equipment. The fair value of the new equipment is $$22,400.$ The fair value of the old equipment cannot be reliably estimated. Required Prepare the entry to record acquisition of the new equipment under each of the following separate cases. a$.$ Transaction has commercial substance. No cash is involved. b$.$ Trans