Reference no: EM133186407
Question - On January 2, 2021, Jordan River began construction of a new citrus processing plant. The automated plant was finished and ready for use on December 31, 2021. Expenditures for the construction were as follows:
January 2, 2021 $600,000
March 31, 2021 1,800,000
June 1, 2021 1,200,000
September 1, 2021 1,500,000
December 1, 2021 1,200,000
The company had $2,500,000 in 10% bonds outstanding in 2021.
The company had $2,000,000 in 12% notes payable.
Required -
1. What are the weighted-average accumulated expenditures?
2. What is the weighted-average interest rate used for interest capitalization purposes?
3. What is the avoidable interest for Jordan River Company?
4. What is the total cost of the project for Jordan River Company?
5. What amount of interest should be charged to expense?
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