Amount of interest capitalized during construction. Nucor. a steel manufacturer, self-constructs a new manufacturing facility in Vermont. At the start of Year 14, the Construction-in-Process account had a balance of $30 million. Construction activity occurred uniformly throughout the year. At the end of Year 14, the balance was $60 million before capi- talization of interest for the year. The outstanding borrowings of the company during the year were as follows:

New Construction Loans at 8 Percent per Year $ 25,000,000 Old Bond Issues Averaging 6 Percent Rate 100,000,000 Total Interest-Bearing Debt $125,000,000

a. Compute the amount of interest capitalized in the Construction-in-Process account for Year 14.

b. Present journal entries for interest for Year 14.

c. On December 31. Year 15, Nucor completed the manufacturing facility and put it to work.
Average Construction-in-Process for Year 15 was SI 10 million. The debt listed above remained outstanding throughout the construction project and the firm did not issue any additional interest-bearing debt during this time. Present journal entries for Year 15 related to interest expense and interest capitalization.