On March 1, Metlock Co. began construction of a small building. The following expenditures were incurred for construction: March 1 $283,200 April 1 288,000 May 1 784,800 June 1 1,036,800 July 1 382,000 The building was completed and occupied on July 1. To help pay for construction $189,000 was borrowed on March 1 on a 12%, three year note payable. The only other debt outstanding during the year was a $2,011,000, 10% note issued two years ago. (a) Calculate the weighted-average accumulated expenditures. The weighted-average accumulated expenditures $
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- March 1: $283,200 — outstanding 4 months (Mar–Jun) - April 1: $288,000 — outstanding 3 months (Apr–Jun) - May 1: $784,800 — outstanding 2 months (May–Jun) - June 1: $1,036,800 — outstanding 1 month (June) - July 1: $382,000 — outstanding 0 months (on completion Show more…
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Chapter 9: Capitalization of Interest On February 1 Sage Inc began construction of a small business building. The following expenditures were incurred for construction: 2/1 $75,000 3/1 220,000 4/1 100,000 6/1 150,000 7/1 100,000 The building was completed and occupied on 7/1. To help pay for construction $60,000 was borrowed on 2/1 with an 8%, 3 year note payable. The only other debt outstanding during the year was a $500,000, 9% note issued 2 years ago. 1) Calculate the weighted-average accumulated expenditures. 2) Calculate avoidable interest.
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