On January 1, Year 3, Starlight Construction Co. began a construction project qualifying for capitalization of interest.

1. On January 1, Year 3, Starlight Construction Co. began a construction project qualifying for capitalization of interest. The total amount spent on this project during Year 3 was $250,000, spent uniformly during the year. To help pay for construction, $200,000 was borrowed at 10% on January 1, Year 3, and funds not needed for construction were temporarily invested in short-term securities, yielding $3,000 in interest revenue. Other than the construction funds borrowed, the only other debt outstanding during the year was a $150,000, 10-year, 7% note payable dated January 1, YEar 1. How much interest should be capitalized by Starlight during Year 3? (Points: 10)$12,500 $25,000 $ 9,500 $22,000 2. A fixed asset has a cost of $12,000 and a salvage value of $3,000. The asset has a three-year life. If depreciation in the third year amounted to $1,500, which depreciation method was used? (Points: 10)Straight-line. Double-declining-balance. Units of production. Sum-of-the-years'-digits. 3. Which of the following methods of determining bad debt expense does not properly match expense against revenue? (Points: 10)Charging bad debts with a percentage of sales under the allowance method. Charging bad debts with a percentage of accounts receivable under the allowance method. Charging bad debts with an amount derived from aging accounts receivable under the allowance method. Charging bad debts as accounts are written off as uncollectible. 4. Imperial Foods checkbook balance on December 31, Year 1 was $122,400. In addition, Imperial held the following items in its safe on December 31:(1) A check for $600 from Brewster, Inc., received December 30, Year 1, which was not included in the checkbook balance.(2) A non-sufficient funds check from Star Company in the amount of $800 that had been deposited at the bank, but was returned for lack of sufficient funds on December 29. The check was to be redeposited on January 3, Year 2. The original deposit has been included in the December 31 checkbook balance.(3) Coin and currency on hand amounted to $1,500.The proper amount to be reported on Imperial Foods' balance sheet for cash at December 31, year 1 is:(Points: 10)$123,000 $122,800 $123,700 $122,400 5. Athens Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, Year 1. Its inventory at that date was $100,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows:PriceIndex107125130What is the cost of the ending inventory at December 31, Year 3, under dollar-value LIFO?(Points: 10)$116,000 $117,120 $117,400 $145,000 6. Golden Corporation has two products in its ending inventory, each accounted for at the lower of cost or market. A profit margin of 30% on selling price is considered normal for each product.Specific data with respect to each product follows:Product #1 Product #2Historical cost..................$15.00.......$45.00Replacement cost...............17.00.........43.00Estimated cost to dispose.....5.00.........26.00Selling price.......................30.00.......100.00In pricing its ending inventory using the lower of cost or market, what unit values should Golden use for products #1 and #2, respectively?(Points: 10)$15.00 and $44.00 $16.00 and $44.00 $16.00 and $45.00 $17.00 and $46.00 7. A schedule of machinery owned by Rain Bird Manufacturing Company is as follows:EstimatedTotal Cost Salvage Value Life in Years684Rain Bird computes composite depreciation on the straight-line method. What is the "composite life" of these assets?(Points: 10)6.2 6.6 6.0 7.5 8. Which of the following statements concerning the impairment of fixed assets is true?I. Impairment losses are shown on the income statement net of tax.II. An impairment loss is recognized if the present value of all expected future cash flows produced by the fixed asset is less than carrying value.III. To determine the amount of any impairment loss, fair value must be used.(Points: 10)I. II. III. I and II. 9. LoJo Developers Inc. purchased a coal mine for $10,000,000. As a condition of the purchase, LoJo agreed to restore the land after mining operations ceased. Restoration costs are estimated at $2,500,000. The proper accounting for these restoration costs is: (Points: 10)Expense them as incurred. Capitalize and depreciate them over the estimated life of the mine. Add them into the depletion base of the mine. Subtract them from the depletion base of the mine. 10. Federal Manufacturers, Inc. purchased land with the intention of building its new administrative headquarters on the site. Which of the following costs should be charged to "Land"?Title and recording fees.II. Clearing of trees and grading.III. Interest on loan to purchase land.IV. Architects fees.V. Installation of sewage system.(Points: 10)I only. I and II only. I, II, III, and IV only. I, II, III, IV, and V.