Prepare a Schedule
Create a schedule that outlines the total spend for San Antonio on the construction expenses.
Develop a schedule that shows initial values of the various assets that San Antonio acquired or constructed during 2013. The company uses the specific interest method to determine the amount of interest capitalized on the building construction.
Develop a schedule that shows the total interest expense that San Antonio will need to show for 2013 as it relates to construction of the new facility.
Early in its fiscal year ending December 31, 2013, San Antonio Outfitters finalized plans to expand operations. The first stage was completed on April 25th with the purchase of a tract of land on the outskirts of the city. The land and existing building were purchased for $800,000. San Antonio paid $200,000 and signed a noninterest-bearing note requiring the company to pay the remaining $600,000 on March 28, 2015. An interest rate of 8% properly reflects the time value of money for this type of loan agreement. Title search, insurance, and other closing costs totaling $20,000 were paid at closing. Below is the trial balance for San Antonio Outfitters as of March 31.
SAN ANTONIO OUTFITTERS
Trial Balance
March 31, 20XX
Debit Credit
Cash .......................................................................................... $3,394,380
Accounts receivable ............................................................... 2,129,500
Prepaid insurance ................................................................... 42,300
Office equipment .................................................................... 119,300
Accumulated Depreciation, Office Equipment .................. $11,750
Inventory ................................................................................. 2,104,000
Building ................................................................................... 100,000
Land.......................................................................................... 720,000
Accounts payable ................................................................... $ 104,410
Notes payable.......................................................................... 600,000
San Antonio, Capital ............................................................. 2,541,700
San Antonio, Withdrawals .................................................... 10,450
Revenue ................................................................................... 6,144,100
Wages expense ........................................................................ 654,500
Depreciation Expense, Office Equipment ........................... 4,250
Equipment rental expense ..................................................... 71,410
Office Supplies 7,500
Advertising expense............................................................... 32,400
Repairs expense ...................................................................... 11,970
Totals ........................................................................................ $9,401,860 $9,401,860
During April, the old building was demolished at a cost of $70,000, and an additional $50,000 was paid to clear and grade the land. Construction of a new building began on May 1 and was completed on October 29. Construction expenditures were as follows:
May 30 $1,200,000
July 30 1.500.000
Sept 1 900,000
Oct 1 1,800.000