Question

On January 1, 2018, Dreamworld Co. began construction of a new warehouse. The building was finished and ready for use on September 30, 2019. Expenditures on the project were as follows: January 1, 2018 $ 307,000 September 1, 2018 $ 459,000 December 31, 2018 $ 459,000 March 31, 2019 $ 459,000 September 30, 2019 $ 307,000 Dreamworld had $5,300,000 in 13% bonds outstanding through both years. Dreamworld's average accumulated expenditures for 2018 was:

Answer 1

Answer:

Dreamworld's average accumulated expenditures for 2018 was = $421,750

Explanation:

Dreamworld's average accumulated expenditures for 2018 was

January 1 - December 31, 2018 = $307,000 x $\frac{12}{12}$ = $307,000

September 31 - December 31 = $459,000 x $\frac{3}{12}$ = $114,750

December 31 - December 31 = $459,000 x $\frac{0}{12}$ = $0

Total expenditure = $307,000 + $114,750 + $0

Total expenditure = $421,750

Since, the question is to determine 2018 expenditure, 2019 balance are not necessary.