2. On March 1, 2012, Newton Company purchased land for an office by paying $900,000 cash. Newton 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 complete and ready for occupancy on July 1. To help pay for construction, $1,200,000 was borrowed on March 1, 2012 on a 9%, 3-year note payable. Other than the construction note, the only debt outstanding during 2012 was a $500,000, 12%, 6 year note payable dated January 1, 2012.

"Assume the weighted average accumulated expenditures for the constuction project are $870,000. The amount of interest cost to be capitalized during 2012 is

a) 130,500

138,000

c) 150,000

d) 168,000

=> answer138,000, and the solution just said (1,200,000 x 9%)+ (250,000 x 12%) = 138,000

• First, I don't know where these numbers came from... help!
• Second, why does the question ask to assume a new weighted average expenditure of $870,000 when there already was a question before this asking about it? (The answer for that question is $1,160,000 forweighted average expenditure on construction project)