Question

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

Answer 1

Marigold Corp.

The weighted-average accumulated expenditures for 2020 is:

= $3,000,000.

Step-by-step 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