Question

On january 1, 2018, dreamworld co. began construction of a new warehouse. the building was finished and ready for use on september 30, 2019. expenditures on the project were as follows: january 1, 2018 $ 313,000 september 1, 2018 $ 465,000 december 31, 2018 $ 465,000 march 31, 2019 $ 465,000 september 30, 2019 $ 313,000 dreamworld had $5,500,000 in 15% bonds outstanding through both years. what was the final cost of dreamworld's warehouse?

Answer 1

Answer: $1,699,160

Step-by-step explanation:

Given the following expenditures:

January 1, 2018 - $313,000 × (12/12)

September 1, 2018 - $465000 × (4/12)

december 31, 2018 - $465,000 × (0/12)

march 31, 2019 - $465,000 × (6/9)

September 30, 2019 - $313,000 × (0/9)

For 2018:

$313,000 × (12/12) ----- $313000

$465000 × (4/12) ------ $155,000

$465,000 × (0/12) ------ $0

-------------- +++++++ +++ --------------

$1,243,000 --------------- $468,000

Bond = $468000 × 0.12 = $56,160

Accumulated expenditure at the end of 2018:

$1243000+56160 = $1299160 ×(9/9) = 1299160

March 31 2019 -------- 310000

September 30,2019 --- 0

Total = $1,699,160