Question

In: Accounting

On January 1, 2018, Dreamworld Co. began construction of a new warehouse. The building was finished...

On January 1, 2018, Dreamworld Co. began construction of a new warehouse. The building was finished and ready for use on September 30, 2019. Expenditures on the project were as follows:

January 1, 2018

$

307,000

September 1, 2018

$

459,000

December 31, 2018

$

459,000

March 31, 2019

$

459,000

September 30, 2019

$

307,000


Dreamworld had $5,300,000 in 13% bonds outstanding through both years.

The average accumulated expenditures for 2019 by the end of the construction period was:

Solutions

Expert Solution

01/01/2018        307,000.00 12/12    307,000.00
01/09/2018        459,000.00 4/12    153,000.00
31/12/2018        459,000.00 0/12                     -  
   1,225,000.00    460,000.00

460,000 x 13% = 59,800

01/01/2019    1,284,800.00 9/9    1,284,800.00
31/03/2019        459,000.00 6/9        306,000.00
30/09/2019        307,000.00 0/9                         -  
   2,050,800.00    1,590,800.00

The Correct Answer is 1,590,800


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