Assume that on November 1, 2016, ABC Company contracted DEF Construction Co. to
ID: 2595170 • Letter: A
Question
Assume that on November 1, 2016, ABC Company contracted DEF Construction Co. to construct a building for $1,400,000 on land costing $100,000 (purchased from the contractor and included in the first payment) ABC made the following payments to the construction company during 2017 January 1 March 1 May 1 December 31 Total $210,000 $300,000 $540,000 $450,000 $1,500,000 DEF Construction completed the building, ready for occupancy, on December 31, 2017. ABC had the following debt outstanding at December 31, 2017 15%, 3-year note to finance purchase of land and construction of the building, dated December 31, 2016, with interest payable annually on December 31 $750,000 ther Debt: 10%, 5-year note payable, dated December 31, 2013, with interest payable annually on December 31 $550,000 12%, 10-year bonds issued December 31, 2012, with interest payable annually on December 31 $600,000 The weighted-average accumulated expenditures of ABC Company during 2017 is (choose the closest answer) A. $820,000 B. $857,500 C. $795,000 D. $830,000Explanation / Answer
Date Amount Period Weighted average expenditure Jan-01 210000 12/12 210000 Mar-01 300000 10/12 250000 May-01 540000 8/12 360000 Dec-31 450000 0/12 0 Total 1500000 820000 Option A is corrrect