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On January 2, 2020, Marigold Corp. began construction of a new citrus processing plant. The automated plant was finished and ready for use on September 30, 2021. Expenditures for the construction were as follows: January 2, 2020 $ 592000 September 1, 2020 1806000 December 31, 2020 1806000 March 31, 2021 1806000 September 30, 2021 1219000 Marigold Corp. borrowed $3330000 on a construction loan at 10% interest on January 2, 2020. This loan was outstanding during the construction period. The company also had $12100000 in 7% bonds outstanding in 2020 and 2021. What were the weighted-average accumulated expenditures for 2020

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anthougo

Answer:

Marigold Corp.

The weighted-average accumulated expenditures for 2020 is:

= $3,000,000.

Explanation:

a) Data and Calculations:

Amount borrowed for construction = $3,330,000

Construction loan interest = 10%

Date of loan = January 2, 2020

Other loans:

7% bonds = $12,100,000

Date                           Expenditure   Weight    Weighted-Average

                                                                              Expenditure

January 2, 2020       $ 592,000     21/21               $592,000

September 1, 2020    1,806,000     13/21                 1,118,000

December 31, 2020  1,806,000       9/21                 774,000

March 31, 2021          1,806,000       6/21                 516,000

September 30, 2021 1,219,000       0/21                 0

Weighted-average accumulated expenditure $3,000,000

Capitalized interest = $3,000,000 * 10% = $300,000

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