Assume the following long-term debt structure for Parton Stores:
Construction Loan at 5% on Building Under Construction .........$2,000,000
Other Borrowings at 6% Average Rate .........................7,200,000
Total Long-Term Debt ....................................$9,200,000
The account Building Under Construction has an average balance during the year of $6,000,000.Parton Stores bases the amount of interest capitalized on the new construction-related borrowing, $2,000,000, and enough of the other borrowing to bring the total to $6,000,000.
How much does Parton Stores capitalize interest on the new construction?
A)$240,000
B)$300,000
C)$320,000
D)$340,000
E)$360,000

Question

Assume the following long-term debt structure for Parton Stores: 
Construction Loan at 5% on Building Under Construction .........$2,000,000
Other Borrowings at 6% Average Rate .........................7,200,000
Total Long-Term Debt ....................................$9,200,000
The account Building Under Construction has an average balance during the year of $6,000,000.Parton Stores bases the amount of interest capitalized on the new construction-related borrowing, $2,000,000, and enough of the other borrowing to bring the total to $6,000,000.
How much does Parton Stores capitalize interest on the new construction?
A)$240,000
B)$300,000
C)$320,000
D)$340,000
E)$360,000

Quizplus · Accepted Answer

The Answer of Assume the following long-term debt structure for Parton Stores: 
Construction Loan at 5% on Building Under Construction .........$2,000,000
Other Borrowings at 6% Average Rate .........................7,200,000
Total Long-Term Debt ....................................$9,200,000
The account Building Under Construction has an average balance during the year of $6,000,000.Parton Stores bases the amount of interest capitalized on the new construction-related borrowing, $2,000,000, and enough of the other borrowing to bring the total to $6,000,000.
How much does Parton Stores capitalize interest on the new construction?
A)$240,000
B)$300,000
C)$320,000
D)$340,000
E)$360,000

Assume the Following Long-Term Debt Structure for Parton Stores