HomeworkFall2009solutions 33&34

HomeworkFall2009solutions 33&34 - HOMEWORK - Fall...

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HOMEWORK - Fall 2009 33. (5 points) On March 1, 2010, Newton Company purchased land for an office site by paying $540,000 cash. Newton began construction on the office building on March 1. The following additional construction-related expenditures were incurred: Date Expenditures March 1, 2010 $ 360,000 April 1, 2010 504,000 May 1, 2010 900,000 June 1, 2010 1,440,000 The office was completed and ready for occupancy on July 1. To help pay for construction, $600,000 was borrowed on March 1, 2010 on a 9%, 3-year note payable. Other than the construction note, the only debt outstanding during 2010 was a $300,000, 12%, 6-year note payable dated January 1, 2010. What were Newton’s interest costs for the year? $600,000 x 9% x 10/12 = $45,000 $300,000 x 12% x 12/12 =$36,000 $81,000 What were Newton’s weighted-average accumulated construction expenditures? $900,000 x 4/12 = $300,000 ($900, 000 = $540,000 for the land + $360,000) $504,000 x 3/12 = $126,000 $900,000 x 2/12 = $150,000 $1,440,000 x 1/12 =
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