Early in 2017, Dobbs Corporation engaged Kiner, Inc. to design and construct a c

Question

Early in 2017, Dobbs Corporation engaged Kiner, Inc. to design and construct a complete modernization of Dobbs's manufacturing facility. Construction was begun on June 1, 2017 and was completed on December 31, 2017. Dobbs made the following payments to Kiner, Inc. during 2017: Date Payment $1900875 2819289 2370507 June 1, 2017 August 31, 2017 December 31, 2017 In order to help finance the construction, Dobbs issued the following during 2017: 1. $1705844 of 10-year, 10% bonds payable, issued at par on May 31, 2017, with interest payable annually on May 31 2. 309535 shares of no-par common stock, issued at $10 per share on October 1, 2017 In addition to the 10% bonds payable, the only debt outstanding during 2017 was a $415797, 10% note payable dated January 1, 2013 and due January 1, 2023, with interest payable annually on January 1 Instructions Compute the amount of the weighted-average accumulated expenditures qualifying for capitalization of interest cost.

Explanation / Answer

Date Expenditure Time period Weighted average expenditure Jun-1-17 1900875 7/12 1108844 Aug-31-17 2819289 4/12 939763 Dec-31-17 2370507 0 0 2048607 Weighted average accumulated expenditure = $2048607 (rounded off)

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