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Grant Industries Inc for Construction of Manufacturing Facility

40. During 2011, Grant Industries, Inc. constructed a new manufacturing facility at a cost of $12,000,000. The weighted average accumulated expenditures for 2011 were calculated to be $5,400,000. The company had the following debt outstanding at December 31, 2011:

(a) 10 percent, five-year note to finance construction of the manufacturing facility, dated January 1, 2011, $3,600,000.
(b) 12 percent, 20-year bonds issued at par on April 30, 2010, $8,400,000.
(c) 8 percent, six-year note payable, dated March 1, 2010, $1,800,000.

Determine the amount of interest to be capitalized by Grant Industries for 2011.

41. On March 1, 2011, the Sefkwak Company paid $400,000 for all the issued and outstanding stock of Bodo Corporation in a transaction properly accounted for as a purchase. The market values of the assets and liabilities of Bodo Corporation on March 1, 2011, are as follows:

Accounts receivable ................................... 120,000
Inventory ............................................. 330,000
Property and equipment ................................ 80,000
Liabilities ........................................... (20,000)

Make the journal entry necessary for Sefkwak to record the purchase.

Solution Summary

Construction of manufacturing facilities are examined.

$2.19