Question

On January 1, Year 1, Chester Co. began construction of a small building. The following expenditures were incurred for construction in Year 1: January 1 $125,000 May 1 $104,000 Oct 1 $124,000 December 31 $200,000 The building was not completed in Year 1. On January 1, Year 2, Chester spent another $180,000 on construction. The building was then completed and occupied on January 31, Year 2. To help pay for construction, $80,000 was borrowed on January 1, Year 1 on a 15%, three-year note payable. The entire $80,000 debt will remain outstanding until Year 4. Chester has no other debt. Calculate the weighted-average accumulated expenditures for Year 2.

Answer 1

Answer:

Weighted average accumulated expenditures

Date	expenditure		Weighted average expenditure
Jan 1	125000	125000*13/12	135417
May 1	104000	104000*9/12	78000
Oct 1	124000	124000*4/12	41333
Dec 31	200000	200000*1/12	16667
Total			271417

Weighted average accumulated expenditure for year 2 = $271417

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