Question

Exercise 10-7 Bonita Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $4,957,500 on January 1, 2017. Bonita expected to complete the building by December 31, 2017. Bonita has the following debt obligations outstanding during the construction period. Construction loan-10% interest, payable semiannually, issued December 31, 2016 $2,015,800 Short-term loan-8% interest, payable monthly, and principal payable at maturity on May 30, 2018 1,606,700 Long-term loan-9% interest, payable on January 1 of each year. Principal payable on January 1, 2021 993,300 Assume that Bonita completed the office and warehouse building on December 31, 2017, as planned at a total cost of $5,195,900, and the weighted-average amount of accumulated expenditures was $3,810,800. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final answers to 0 decimal places, e.g. 5,275.) Avoidable Interest $ Compute the depreciation expense for the year ended December 31, 2018. Bonita elected to depreciate the building on a straight-line basis and determined that the asset has a useful life of 30 years and a salvage value of $299,200. (Round answer to 0 decimal places, e.g. 5,275.) Depreciation Expense

Answer 1