Final answer:
The weighted-average accumulated expenditures for Imhoff Co.'s building construction are $180,000, calculated by considering the duration each monthly payment of $180,000 has been invested in the construction and averaging the total expenditures over the construction period.
Step-by-step explanation:
To determine the amount of interest cost to be capitalized for Imhoff Co.'s construction of a small building, we need to calculate the weighted-average accumulated expenditures. Since payments of $180,000 were made monthly for four months, we can calculate the average accumulated expenditures by taking into account the duration each payment has been invested in the construction. The first payment was in the construction process for four months, the second for three months, the third for two months, and the fourth for one month.
The weighted-average accumulated expenditures are found by multiplying each payment by the number of months it was outstanding and then adding up these products:
- $180,000 x 4 months = $720,000
- $180,000 x 3 months = $540,000
- $180,000 x 2 months = $360,000
- $180,000 x 1 month = $180,000
The sum of these products is $1,800,000, and to find the average, we divide this sum by the total number of months, which in this case is 10 (4+3+2+1). Therefore, the weighted-average accumulated expenditures are $1,800,000 / 10 = $180,000.