Question

Miller Company is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were $12,800,000 on March 1, $10,560,000 on June 1, and $16,000,000 on December 31. Miller Company borrowed $6,400,000 on January 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 3-year, $12,800,000 note payable and an 11%, 4-year, $24,000,000 note payable. What is the actual interest for Miller Company

Answer 1

Answer:

Miller Company

The actual interest for Miller Company is:

= $4,688,000.

Explanation:

a) Data and Calculations:

Expenditures:

March 1 $12,800,000

June 1   $10,560,000

Dec. 31 $16,000,000

Notes Payable:                                                   Amount       Actual Interest

January 1: 5-year, 12% Construction Loan = $6,400,000        $768,000

Year's: 3-year, 10% Note Payable =               12,800,000         1,280,000

Year's: 4-year, 11% Note Payable =               24,000,000        2,640,000

Total                                                             $43,200,000      $4,688,000