Computing and Recording Interest Capitalization Weld Corporation is constructing a plant for its own use....
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Computing and Recording Interest Capitalization Weld Corporation is constructing a plant for its own use. Weld capitalizes interest on an annual basis. The following expenditures are made during the current year: January 1, $54,000; July 1, $522,000; September 1, $1,440,000; and December 31, $3,798,000. The following debts were outstanding throughout the current year. Debt Amount Construction note, 12% $180,000 Short-term note payable, 15% 720,000 Accounts payable (noninterest-bearing) 720,000 Answer the following questions, rounding your answers to the nearest whole dollar. a. Compute the amount of interest to be capitalized in 2020. $ b. Calculate the amount of interest to expense in 2020. $ c. Prepare the 2020 summary journal entry to record the construction expenditures and interest, assuming that construction is not complete on December 21, 2020. Note: Record debit accounts in alphabetical order using the first letter of the account name. Cr. Account Name Dr
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