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Question: 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.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92579329

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