Question

Montgomery Industries spent $700,000 in 2017 on a construction project to build a library. Montgomery also capitalized $35,000 of interest on the project in 2017, Montgomery financed 100% of the construction with a 12% construction loan The project was completed on September 30, 2018. Additional expenditures in 2018 were as follows: $ 99,000 189,000 45,000 73,000 Feb. 28 Apr. 30 Jul. 1 Sept. 30

Required Determine the completed cost of the library. (Do not round intermediate calculations.) Completed cost of the library 747.960

Answer 1

The Completed lost of Library is

Explanation: $1224880

Solution

Given that:

Amount Period Average expenditure

Accumulated

expenditure Jan 1 735000 9/9 735000

Feb. 28 99000 7/9 77000

Apr. 30 189000 5/9 105000

Jul. 1 45000 3/9 15000

Sept. 30 73000 0 0

Average Accumulated

expenditure 1141000 932000

Interest to be capitalized = 932000*12%*9/12= $83880

The Completed lost of Library = 1141000+83880= $1224880