Greig Landscaping began construction of a new plant on Dec 1,2014. On this date, the company purchased a parcel of land for $139,000 in cash. In addition it paid $2,000 in surveying costs and $4,000 for a title insurance policy. An old dwelling on the premises was demolished at a cost of $3,000 with $1,000 being received from the sale of material.
Architectural plans were also formalized on December 1, 2014, whenthe architect was paid $30,000. The necessary building permits costing $3,000 were obtained from the city and paid for on Dec 1 as well. The excavation work began during the first week in Dec with payments made to the contractor as follows:
March 1 – $240,000
May 1 – $330,000
July 1 – $60,000
The building was completed on July 1, 2015.
To finance construction on this plant, Grieg borrowed $600,000 from the bank on December 1, 2014. Grieg had no other borrowings. The $600,000 was a 10-year loan bearing interest at 8%.
Using Excel, develop a well labeled spreadsheet that you could submit to your boss showing:
- A spreadsheet with appropriate formulas (flexible design); everything can be placed on one sheet or multiple sheets depending on your design
- The calculation for the capitalization of interest
- The Land total for both Dec. 31, 2014 and Dec. 31, 2015
- The Buildings total for both Dec. 31, 2014 and Dec. 31, 2015
- The Interest Expense total for both Dec. 31, 2014 and Dec. 31, 2015