Reference no: EM13827007
A&A Products began construction on a warehouse that had a total estimated cost of $4,000,000. Construction began January 2, 2012. Expenditures for 2012 were made as follows: January 2, $1,000,000, March 1, $900,000, July 1, $400,000, and October 1 $800,000. A&A Products financed the project by issuing $1,000,000 in stock at the beginning of 2012 and in 2011, obtained a construction loan for $1,200,000 at an interest rate of 8%. Additionally, the company had a $1,000,000, 9% note payable that was obtained in 2010 and a $2,000,000, 11% note payable that was obtained in 2009. Both notes come due in 2016. The warehouse was completed in 2013.
Required:
A. Calculate the weighted average accumulated expenditures for the year 2012.
B. How much is the avoidable interest in the year 2012?
C. How much is the actual interest in the year 2012?
D. Prepare the entry to record the interest capitalized in 2012.
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