Question

Montgomery Industries spent $700,000 in 2017 on a construction project to build a library. Montgomery also capitalized $35,000 of interest on the project in 2017, Montgomery financed 100% of the construction with a 12% construction loan The project was completed on September 30, 2018. Additional expenditures in 2018 were as follows: $ 99,000 189,000 45,000 73,000 Feb. 28 Apr. 30 Jul. 1 Sept. 30
Required Determine the completed cost of the library. (Do not round intermediate calculations.) Completed cost of the library 747.960

Answer 1

Answer:

The Completed lost of Library is

Explanation: $1224880

Solution

Given that:  

                                     Amount Period Average expenditure

Accumulated

expenditure Jan 1         735000     9/9         735000

Feb. 28                          99000       7/9          77000

Apr. 30                          189000      5/9          105000

Jul. 1                               45000       3/9           15000

Sept. 30                         73000        0                  0

Average Accumulated

expenditure                   1141000                       932000

Interest to be capitalized = 932000*12%*9/12= $83880

The Completed lost of Library = 1141000+83880= $1224880