Question 1

On March 1, ABC Co. began construction of a small building. The following expenditures were incurred for construction:

Date Expenditures

3/1/2022 $ 300,000 4/1/2022 400,000 5/1/2022 620,000 6/1/2022 1,020,000 7/31/2022 310,000

The building was completed and occupied on August 1. To help pay for construction $400,000 was borrowed on March 1 on a 12% three-year note payable. The only other debt outstanding during the year was a $200,000, 10% note issued two years ago.

(a). Calculate the weighted-average accumulated expenditures.

(Hint: using the following four-column schedule to calculate)

Date	Expenditures	Capitalization Period	Weighted-Average Accumulated Expenditures

(b). Calculate the avoidable interest.

(c). Calculate the actual interest.

(d). Journal entry to capitalize interest.