Question Details

Mocl Co. began construction of a small building



Ex. 1—Weighted-Average Accumulated Expenditures.
On April 1, Paine Co. began construction of a small building. Payments of $120,000 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




Ex. 2—Capitalization of interest.
On March 1, Mocl Co. began construction of a small building. The following expenditures were incurred for construction:
	March 1	$  75,000	April 1	$  74,000
	May 1	180,000	June 1	270,000
	July 1	100,000
The building was completed and occupied on July 1. To help pay for construction $50,000 was borrowed on March 1 on a 12%, three-year note payable. The only other debt outstanding during the year was a $500,000, 10% note issued two years ago.

Instructions
(a)	Calculate the weighted-average accumulated expenditures.
(b)	Calculate avoidable interest.




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