On March 1, Carr Co.began construction of a small building.Payments of $120,000 were made monthly for three months beginning March 1.The building was completed and ready for occupancy on June 1.In determining the amount of interest cost to be capitalized, the weighted-average accumulated expenditures are

Question

Quizplus · Accepted Answer

To determine the weighted-average accumulated expenditures, we need to calculate the total amount of construction costs incurred each month and multiply them by the number of months they were outstanding, then divide the sum by the total number of months.

March: $120,000 x 3 = $360,000
April: $120,000 x 2 = $240,000
May: $120,000 x 1 = $120,000

Total accumulated expenditures = $720,000

Weighted-average accumulated expenditures = ($360,000 + $240,000 + $120,000) / 3 = $240,000 / 3 = $80,000

Therefore, the answer is B) $60,000.