Capitalization of Interest. On March 1, Mocl Co. Began Construction of a Small

question 42

Essay

Capitalization of interest.
On March 1, Mocl Co. began construction of a small building. The following expenditures were incurred for construction:
The building was completed and occupied on July 1. To help pay for construction $150,000 was borrowed on March 1 on a 12%, three-year note payable. The only other debt outstanding during the year was a $1,500,000, 10% note issued two years ago.

Instructions

(a) Calculate the weighted-average accumulated expenditures.
(b) Calculate avoidable interest.

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