PLEASE ANSWER BY 10/21 9PM

Start by calculating the weighted average general (excludes construction loan)interest rates for 2018 and 2017. (check figure is 5.4% for 2018)

Land goes into capitalization base, but at cost, and only as of the date construction starts

Be sure that your initial investment in 2019 includes land, prior construction expenditures and 2018 capitalized interest (it is now part of the cost).

Dont forget that 2018 loans are all outstanding on January 1, 2017.

You should have more loans than you need in 2018, but run out of loans in 2019

Construction Interest Problem Exam type question Party Island Company Construction Interest Problem Party Island Company purchased land in 2017 for a new office complex at a cost of $480,000. On May 1, 2018, construction of the office complex began (the land was appraised at $550.000 on that date). Construction was completed on November 1, 2019. Construction financing was obtained at an annual interest rate of 8%. All construction borrowing was repaid on Jan. 1. 2020. Party Island's financial year is the calendar year. During all of 2018 and 2019. Party Island had the other following loans Loan Annual Amount Date of loan Date of repayment Bank A 7% $250,000 July 1, 2018 July 1, 2020 Bank B 5% $500,000 July 1, 2017 April 1. 2020 Expenditures for the building and draws against the construction loan agreement were as follows: Construction payments Construction loan amounts June 1, 2018 576,000 June 1, 2018 540,000 September 1, 2018 720,000 August 1, 2018 540,000 Rate February 1, 2019 April 1, 2019 October 1, 2019 900.000 February 1, 2019 1,080,000 May 1, 2019 360,000 900.000 180,000 Required: Balance sheet asset titles and account balances (not including accumulated depreciation) relative the above transactions on: December 31, 2018 December 31, 2019 Construction Interest Problem Exam type question Party Island Company Construction Interest Problem Party Island Company purchased land in 2017 for a new office complex at a cost of $480,000. On May 1, 2018, construction of the office complex began (the land was appraised at $550.000 on that date). Construction was completed on November 1, 2019. Construction financing was obtained at an annual interest rate of 8%. All construction borrowing was repaid on Jan. 1. 2020. Party Island's financial year is the calendar year. During all of 2018 and 2019. Party Island had the other following loans Loan Annual Amount Date of loan Date of repayment Bank A 7% $250,000 July 1, 2018 July 1, 2020 Bank B 5% $500,000 July 1, 2017 April 1. 2020 Expenditures for the building and draws against the construction loan agreement were as follows: Construction payments Construction loan amounts June 1, 2018 576,000 June 1, 2018 540,000 September 1, 2018 720,000 August 1, 2018 540,000 Rate February 1, 2019 April 1, 2019 October 1, 2019 900.000 February 1, 2019 1,080,000 May 1, 2019 360,000 900.000 180,000 Required: Balance sheet asset titles and account balances (not including accumulated depreciation) relative the above transactions on: December 31, 2018 December 31, 2019