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Grant Industries Inc for Construction of Manufacturing Facility

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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.

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Construction of manufacturing facilities are examined.

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