The Barlow Corporation began a two-year construction project on a new building on January 1, 2020. The
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Question:
The Barlow Corporation began a two-year construction project on a new building on January 1, 2020. The following information is available:
| Capitalization period: January 1, 2020 - June 30, 2021 | |||||||
| Expenditures related to the construction: | |||||||
| 2020 | |||||||
| January 1 | $ 550,000 | ||||||
| March 1 | 650,000 | ||||||
| September 1 | 750,000 | ||||||
| December 1 | 450,000 | ||||||
| 2021 | |||||||
| January 30 | $ 350,000 | ||||||
| June 1 | 250,000 | ||||||
| Amounts borrowed and outstanding: | |||||||
| $ 1,000,000 | at 8% borrowed specifically for the project | ||||||
| $ 8,000,000 | at 5.5% | ||||||
| $ 7,000,000 | at 8.5% | ||||||
| Prepare the journal entries to record the interest capitalization for 2020 and 2021, respectively. | |||||||
| (For interest calculations, use 2 decimal points) | |||||||
Expert Answer:
Schedule of Weighted Average Expenditure 2020 Date Amount Current year Capitilization Period Weighte... View the full answer
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