On March 1, 2008, Dennis Company purchased land for an office site by paying $540,000 cash. Dennis began construction on the office building on March 1. The following expenditures were incurred for construction:
The office was completed and ready for occupancy on July 1. To help pay for construction, $720,000 was borrowed on March 1, 2008 on a 9%, 3 -year note payable. Other than the construction note, the only debt outstanding during 2008 was a $300,000, 12%, 6-year note payable dated January 1, 2008.
-The actual interest cost incurred during 2008 was

Question

On March 1, 2008, Dennis Company purchased land for an office site by paying $540,000 cash. Dennis began construction on the office building on March 1. The following expenditures were incurred for construction:
  The office was completed and ready for occupancy on July 1. To help pay for construction, $720,000 was borrowed on March 1, 2008 on a 9%, 3 -year note payable. Other than the construction note, the only debt outstanding during 2008 was a $300,000, 12%, 6-year note payable dated January 1, 2008.
-The actual interest cost incurred during 2008 was

Quizplus · Accepted Answer

($720,000 × 9% × 10/12) + ($300,000 × 12%) = $90,000.

On March 1, 2008, Dennis Company Purchased Land for an Office