Construction of Building A building was constructed on land purchased last year at a cost of $150,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows.
Date Payment
2/1 $120,000
6/1 360,000
9/1 480,000
11/1 100,000
To finance construction of the building a $600,000, 12% construction loan was taken out on February 1. The loan was repaid on November 1.
The firm had $200,000 of other outstanding debt during the year at a borrowing rate of 8%.
Note: No need to record a journal entry, just record the land and building acquisition cost as of November 1.