Montgomery Industries Spent $600,000 in 2008 on a Construction Project

question 39

Essay

Montgomery Industries spent $600,000 in 2008 on a construction project to build a library. Montgomery also capitalized $30,000 of interest on the project in 2008. Montgomery financed 100% of the construction with a 10% construction loan. The project was completed on September 30, 2009. Additional expenditures in 2009 were as follows:
Required:
Determine the completed cost of the library. Show supporting computations.
$\begin{array}{lr}\text { Feb. 28 } & \$ 90,000 \\\text { Apr. 30 } & 180,000 \\\text { Jul. 1 } & 36,000 \\\text { Sept. 30 } & 64,000\end{array}$

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Definitions:

Inventory Accounts

Accounts used to track the value of a company's stored resources that are intended for sale.

Production Cost Report

A detailed report that provides information about the total cost and output of a production department or process for a given period.

Business Organization

A structured entity formed for the purpose of conducting commercial, industrial, or professional activities.

Just-In-Time Management

A management strategy that aligns raw-material orders from suppliers directly with production schedules, minimizing inventory levels and waste.