Use the following information to solve the following questions:
On March 1, 2020, Mauritania Ltd. purchased land for $ 270,000 cash, which they intend to use for their new head office. Construction on the office building began on March 1. The following expenditures were incurred for construction:
$$\begin{array} { l l }
\text { Date } & \text { Expenditures } \
\text { March } 1,2020 &\$450,000\
\text { April } 1,2020 & \mathbf { 2 5 2 , 0 0 0 } \
\text { May } 1,2020 & 450,000 \
\text { June } 1,2020 & 720,000
\end{array}$$ The office building was completed and ready for occupancy on July 1. To help pay for construction, Mauritania borrowed $ 360,000 on March 1, 2020, on a 9%, three-year note payable. Other than this note, the only other debt outstanding during 2020 was a $ 150,000, 10%, six-year note payable dated January 1, 2019.
-The weighted-average accumulated expenditures on the construction project during 2020 were
A) $ 1,467,000.
B) $ 348,000.
C) $ 258,000.
D) $ 156,000.

Question

Use the following information to solve the following questions: 
On March 1, 2020, Mauritania Ltd. purchased land for $ 270,000 cash, which they intend to use for their new head office. Construction on the office building began on March 1. The following expenditures were incurred for construction:
 $$\begin{array} { l l } 
\text { Date } & \text { Expenditures } \
\text { March } 1,2020 &\$450,000\
\text { April } 1,2020 & \mathbf { 2 5 2 , 0 0 0 } \
\text { May } 1,2020 & 450,000 \
\text { June } 1,2020 & 720,000
\end{array}$$ The office building was completed and ready for occupancy on July 1. To help pay for construction, Mauritania borrowed $ 360,000 on March 1, 2020, on a 9%, three-year note payable. Other than this note, the only other debt outstanding during 2020 was a $ 150,000, 10%, six-year note payable dated January 1, 2019.
-The weighted-average accumulated expenditures on the construction project during 2020 were
A) $ 1,467,000.
B) $ 348,000.
C) $ 258,000.
D) $ 156,000.

Quizplus · Accepted Answer

To calculate the weighted-average accumulated expenditures, we need to add the total expenditures incurred during the construction ($ 450,000 + $ 252,000 + $ 450,000 + $ 720,000 = $ 1,872,000) and divide it by the number of months the construction was ongoing during 2020. The construction was ongoing during March, April, May, and June, so it was ongoing for four months. Therefore, the weighted-average accumulated expenditures were:

$ 1,872,000 / 4 = $ 468,000

We need to subtract the cost of the land from this amount to get the accumulated expenditures for construction. Therefore,

Accumulated expenditures for construction = $ 468,000 - $ 270,000 = $ 198,000

Therefore, the correct answer is B) $ 348,000.

Use the Following Information to Solve the Following Questions The Office Building Was Completed and Ready for Occupancy on