On March 1, 2012 newton company purchased land for an office site by paying $900,000 cash. Began construction on the office building on March 1. The following expenditures were incurred for construction:
March 1, 2012 $600,000
April 1, 2012 $840,000
May 1, 2012 $1,500,000
June 1 2012 $2,400,000
The office was completed and ready for occupancy on July 1 to help pay for construction, $1,200,000 was borrowed one March 1, 2012 when a 9%, three year note payable. Other than the construction note, the only debt outstanding during 2012 was a $500,000, 12%, six-year note payable dated January 1, 2012.
The weighted average accumulated expenditures on the construction project during 2012 were
A) $640,000
B) $4,890,000
C) $520,000
D) $1,160,000
Assume the weighted average accumulated expenditures for the construction project are $870,000. The amount of interest cost to be capitalized during 2012 is
A) $130,500
B) $138,000
C) $150,000
D) $168,000