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# Management_120A_Course_Reader_Solutions_-_Rev_L2 - 120A...

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COURSE READER SOLUTIONS Danny S. Litt Student Name: ___________________________________________ Student ID Number: _______________________________________ Intermediate Financial Accounting Management 120A

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DANNY S. LITT MANAGEMENT 120A COURSE READER SOLUTIONS - REV L2 Page | 1 Problem Redo the previous problem using weighted average interest method. Calculations Part 1 2009: Expenditures for 2009: January 3, 2009 \$500,000 12/ 12 \$500,000 March 31, 2009 400,000 9/ 12 300,000 September 30, 2009 600,000 3/ 12 150,000 Accumulated expenditures \$1,500,000 Average accumulated expenditures \$950,000 Interest capitalized \$950,000 9.71% \$92,245 \$1,000,000 8% \$80,000 2,000,000 6% \$120,000 4,000,000 12% 480,000 \$7,000,000 9.71% \$680,000 2010: Expenditures for 2010: January 1, 2010 \$1,592,245 6/ 6 \$1,592,245 April 30, 2010 600,000 5/ 6 500,000 August 31, 2010 300,000 2/ 6 100,000 Accumulated expenditures \$2,492,245 Average accumulated expenditures \$2,192,245 Interest capitalized \$2,192,245 9.71% 6/12 \$106,433 Part 2 Accumulated expenditures 6/30/2010, before interest capitalization \$2,492,245 2010 interest capitalized 106,433 Total cost of building \$2,598,678 Part 3 2009: \$1,000,000 8% \$80,000 2,000,000 6% 120,000 4,000,000 12% 480,000 Total interest incurred \$680,000 Less: Interest capitalized (92,245) 2009 interest expense \$587,755 2010: Total interest incurred \$680,000 Less: Interest capitalized (106,433)
DANNY S. LITT MANAGEMENT 120A COURSE READER SOLUTIONS - REV L2 Page | 2 Problem

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