94.8k views
4 votes
On January 1, 2020, Wells Tech signed a $950,000 two-year construction contract. Wells secured $950,000 financing at 7%. In 2020, Wells paid out $650,000; average accumulated expenditures were $375,000. Excess borrowed funds were invested, yielding $120,000 income. What should Wells report as capitalized interest at December 31, 2020?

1 Answer

3 votes

Answer:

$26250

Step-by-step explanation:

The capitalized interest wil be = Average Accumulated Expenditures * Rate of Interest.

= 375000 * 7% = $26250

User Sdduursma
by
7.7k points