Snowbird Company is constructing a building that qualifies for interest capitalization. It is built between...
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Accounting
Snowbird Company is constructing a building that qualifies for interest capitalization. It is built between January 1 and December 31, 2020. Snowbird made the following expenditures: April 1, $396,000; July 1, $400,000; September 1, $510,000; and December 1, $120,000. The company borrowed $500,000 at 12% to help finance the project. In addition, the company outstanding borrowings of $2,000,000 at 8% and $1,000,000 at 9%.
Instructions: Determine the following. Please show work.
a. Weighted average of Expenditures
b. The avoidable interest
c. The total interest for 2020
d. The journal entry to accrue the total interest for 2020
e. The journal entry to capitalize the interest as part of the cost the building.
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