Question Details

What were the weighted-average accumulated expenditures 



Use the following information for questions 1 through 4.

On January 2, 2010, Indian River Groves began construction of a new citrus processing plant. The automated plant was finished and ready for use on September 30, 2011. Expenditures for the construction were as follows:

January 2, 2010	$200,000
September 1, 2010	  600,000
December 31, 2010	  600,000
March 31, 2011	  600,000
September 30, 2011	  400,000

Indian River Groves borrowed $1,100,000 on a construction loan at 12% interest on January 2, 2010. This loan was outstanding during the construction period. The company also had $4,000,000 in 9% bonds outstanding in 2010 and 2011.

	1.	What were the weighted-average accumulated expenditures for 2010?
a.	$533,333
b.	$500,000
c.	$400,000
d.	$1,000,000

	2.	The interest capitalized for 2010 was:
a.	$180,000
b.	$48,000
c.	$192,000
d.	$60,000

	3.	What were the weighted-average accumulated expenditures for 2011 by the end of the construction period?
a.	$390,000
b.	$1,635,000
c.	$1,986,000
d.	$1,386,000

	4.	The interest capitalized for 2011 was:
a.	$124,740
b.	$118,305
c.	$  25,740
d.	$ 99,000





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