[neymarjr]

Hello!
Thank you for your response!

My calculation is as follows. Could you please, check them and give your comments?

The borrowing cost that will be expensed to P&L = $800,000×4/12 = $266,666.67
The borrowing cost that will be capitalized = ($800,000×8/12)-$18,000 = $515,333.33
The journal entries will be as following:
Credit: Interest payable (SFP) $800,000
Debit: New factory (SFP) $515,333.33
Debit: Interest Income (IS) $18,000
Debit: Interest expense in P&L (IS) $266,666.67

Thank you advance!

[neymarjr]

Thank you for your response!
Sorry, as I am new on the site, I did not know rules.

1. I am here struggling to chose the correct costs. Especially, should I keep the “bonus for ceo” in above mentioned question as a cost of inventory?
My calculation is: 150mln-10mln(additional charge)=140mln
140 mln / 15000 = 9,333.33 USD per ton. Is it correct?
2. I am not really sure what accounts will be affected by above mentioned example… I would really appreciate, if you give the suggestion about journal entries.

Thank you in advance!

[neymarjr]

Hello everyone! Could someone solve the problem above. I would like to check my solutions. I am preparing for upcoming exam! Thanks in advance!

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