Use the Following Information for Questions
on March 1

question 6

Multiple Choice

Use the following information for questions
On March 1, 2007, Dennis Company purchased land for an office site by paying $540,000 cash.Dennis began construction on the office building on March 1.The following expenditures were incurred for construction: $$\begin{array} { l r } \text { Date } & \text { Expenditures } \\\hline \text { March } 1,2007 & \$ 360,000 \\\text { April } 1,2007 & 504,000 \\\text { May 1, } 2007 & 900,000 \\\text { June } 1,2007 & 1,440,000\end{array}$$ The office was completed and ready for occupancy on July 1.To help pay for construction, $720,000 was borrowed on March 1, 2007 on a 9%, 3-year note payable.Other than the construction note, the only debt outstanding during 2007 was a $300,000, 12%, 6-year note payable dated January 1, 2007.
-Assume the weighted-average accumulated expenditures for the construction project are $870,000.The amount of interest cost to be capitalized during 2007 is

• A)$78,300.
• B)$82,800.
• C)$90,000.
• D)$100,800.

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Definitions:

Common Shares

Equity securities that represent ownership in a corporation, giving holders voting rights and a share in the company's profits through dividends or capital appreciation.

Directors

Individuals elected by shareholders to oversee the management and make strategic decisions for a corporation.

Model Business Corporation Act (MBCA)

A set of model laws prepared by the American Bar Association to provide a standard for the incorporation and operation of corporations in the United States.

Joint Ventures

Business agreements between two or more entities to undertake a specific project or business activity together.