On July 31 2017 Grouper Company engaged Minsk Tooling Compan

On July 31, 2017, Grouper Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction was begun immediately and was completed on November 1, 2017. To help finance construction, on July 31 Grouper issued a $278,400, 3-year, 12% note payable at Netherlands National Bank, on which interest is payable each July 31. $188,400 of the proceeds of the note was paid to Minsk on July 31. The remainder of the proceeds was temporarily invested in short-term marketable securities (trading securities) at 10% until November 1. On November 1, Grouper made a final $90,000 payment to Minsk. Other than the note to Netherlands, Grouper’s only outstanding liability at December 31, 2017, is a $32,000, 8%, 6-year note payable, dated January 1, 2014, on which interest is payable each December 31.

Warning

Don\'t show me this message again for the assignment

Ok  Cancel  

[Collapse question part]

(a)

[Partially correct answer.] Your answer is partially correct. Try again.

Calculate the interest revenue, weighted-average accumulated expenditures, avoidable interest, and total interest cost to be capitalized during 2017.

Interest revenue
$
[Entry field with correct answer] 2250
Weighted-average accumulated expenditures
$
[Entry field with correct answer] 47100
Avoidable interest
$
[Entry field with incorrect answer] 6280
Interest capitalized
$
[Entry field with incorrect answer]

Solution

Interest Revenue ( $278400-$188400)*12%*3/12=$2250 Weighted Average Accumulated Expenditure ($188400*3/12)=$47100 Avoidable Interest($47100X12%)=$5652 Interest Capitalized= $5652