Question

Testbank Multiple Choice Question 86 Bonita Industries is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were $6300000 on March 1, $5260000 on June 1, and $8450000 on December 31. Bonita Industries borrowed $3180000 on January 1 on a 5-year, 10% note to help finance construction of the building. In addition, the company had outstanding all year a 8%, 3-year, $6410000 note payable and an 9%, 4-year, $12150000 note payable. What are the weighted-average accumulated expenditures? $8318333 $9720000 $20010000 $11560000

Answer 1

Answer:

$8,318,333

Explanation:

The computation of the weighted average accumulated expenditure is shown below:

Date Amount       Capitalization period Weighted Average Accumulated Expenditures  

Mar 1 $6,300,000 10 months                  $5,250,000  ($6,300,000 × 10 months ÷ 12 months)

Jun 1 $5,260,000 7 months                   $3,068,333.33   ($5,260,000 ×  7 months  ÷ 12 months)

Dec 31 $8,450,000 0 months                    $0

Total                                                             $8,318,333

We simply multiplied the amount with the capitalization period so that the weighted average accumulated expenditure could come