On January 1, 2016, Kendall Inc. began cons... On January 1, 2016, Kendall Inc.
ID: 2470692 • Letter: O
Question
On January 1, 2016, Kendall Inc. began cons... On January 1, 2016, Kendall Inc. began construction of an automated cattle feeder system. The system was finished and ready for use on September 30, 2017. Expenditures on the project were as follows: Kendall borrowed $750,000 on a construction loan at 12% interest on January 1, 2016. This loan was outstanding throughout the construction period. The company had $4,500,000 in 9% bonds payable outstanding in 2016 and 2017. Average accumulated expenditures for 2017 was: $536,000. $1, 236,000. $1, 200,000. $1,036,000.Explanation / Answer
A)
Jan 1, 2016- ----------------------$200,000
Sep 1,2016-------------------------$300,000
Dec 31,2016------------------------$300,000
$800,000
B)
Interest :
Jan 1, 2016- ----------------------$200,000 x 12% x 12/12= 24,000
Sep 1,2016-------------------------$300,000 x 12% x 4/12 =12,000
Dec 31,2016------------------------$300,000 -___0____
$36,000
C)
Mar 31 ,2017------------------------$300,000 x 6/9 =$ 200,000
Sep 30,2017--------------------------$200,000 x 0/9 = 0
---------------------------
$200,000
Average accumulated expenditures for 2012:
A+B+C=$800,000+$36,000+$200,000
=$1,036,000