Capitalized Interest: Journal Entry
Refer to Practice 10 6. Make the journal entry necessary to record total interest paid for the year. Assume that all of the interest was paid in cash on December 31.
Practice 10 6
Capitalized Interest: Single Year Computation
The company had the following loans outstanding for the entire year:
|
Amount |
Interest Rate |
|
|
Specific construction loan |
$100,000 |
10% |
|
General loan |
2,000,000 |
12 |
The company began the self construction of a building on January 1. The following expenditures were made during the year:
|
1 Jan |
$100,000 |
|
1 May |
200,000 |
|
1 Nov |
300,000 |
|
Total |
$600,000 |
Construction was completed on December 31. Compute (1) the amount of interest capitalized during the year and (2) the recorded cost of the building at the end of the year.