On March 1, 2004, Fairly Company purchased land for an office site by paying $360,000 cash. Fairly began construction on the office building on March 1. The following expenditures were incurred for construction:

 Date Expenditures

 March 1, 2004 $240,000

 April 1, 2004 336,000

 May 1, 2004 600,000

 June 1, 2004 900,000

The office was completed and ready for occupancy on July 1. To help pay for construction, $480,000 was borrowed on March 1, 2004 on a 9%, 3-year note payable. Other than the construction note, the only debt outstanding during 2004 was a $200,000, 12%, 6-year note payable dated January 1, 2004.

 6. The weighted-average accumulated expenditures on the construction project during 2004 were

 a. $256,000.

 b. $1,956,000.

 c. $208,000.

 d. $464,000.

I do not understand how to calculate this

Please help me

Are you sure of the numbers ?

I got this feeling there is something wrong ..

As the sum of the expenditure excluding any borrowing cost exceeds $ 2,000,000, how come the answers are these low amounts

What is the correct answer? Where did you get the question from? Is it in Wiley? Are there any explanations?

Give us some more info , so we cah help you :) Right now I don't have a clue how you weight these expenditures. (I did it by dates, but does not work)

hmmm... the question asking abt "weighted average of accumulated expenditures" onky and not what interest is to be capitalized.

The construction period is only for 4 months (Mar 1 to July 1) so we should be applying the weighted avg to these 4 months... but, how?

i m still looking into it !

Following are my workings which don't match with the answers :-

Date	Amount	Capitalization period	Weighted average
			accumulated expenditures
1-Mar	240,000	1	240000
1-Apr	336,000	3/4	252000
1-May	600,000	2/4	300000
1-Jun	900,000	1/4	225000
	2,076,000		1017000

I am not sure what is missing?? Anyone ??