Question 1
On April 1 Paine Co. began construction of a small building. Payments of $180000 were made monthly for four months beginning on April 1. The building was
completed and ready for occupancy on August 1. For the purpose of determining the amount of interest cost to be capitalized calculate the weighted-average
accumulated expenditures on the building by completing the schedule below:
Date Expenditures Capitalization Period Weighted-Average Expenditures
Question 2
On March 1 Mocl Co. began construction of a small building. The following expenditures were incurred for construction:
March 1 $ 150000 April 1 $ 148000
May 1 360000 June 1 540000
July 1 200000
The building was completed and occupied on July 1. To help pay for construction $100000 was borrowed on March 1 on a 12% three-year note payable. The only
other debt outstanding during the year was a $1000000 10% note issued two years ago.
Instructions
(a) Calculate the weighted-average accumulated expenditures.
(b) Calculate avoidable interest.