Weighted average accumulated expenditures on construction

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Reference no: EM13906216

On March 1, 2012 newton company purchased land for an office site by paying $900,000 cash. Began construction on the office building on March 1. The following expenditures were incurred for construction:

March 1, 2012 $600,000

April 1, 2012 $840,000

May 1, 2012 $1,500,000

June 1 2012 $2,400,000

The office was completed and ready for occupancy on July 1 to help pay for construction, $1,200,000 was borrowed one March 1, 2012 when a 9%, three year note payable. Other than the construction note, the only debt outstanding during 2012 was a $500,000, 12%, six-year note payable dated January 1, 2012.

The weighted average accumulated expenditures on the construction project during 2012 were

A) $640,000

B) $4,890,000

C) $520,000

D) $1,160,000

Assume the weighted average accumulated expenditures for the construction project are $870,000. The amount of interest cost to be capitalized during 2012 is

A) $130,500

B) $138,000

C) $150,000

D) $168,000

Reference no: EM13906216

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