On December 31, 2020, Omega Inc., a public company, borrowed $3 million at 12% payable annually to finance the construction of a new building. In 2021, the company made the following expenditures related to this building structure (unless otherwise noted): March 1, $510,000; June 1, $600,000; July 1, $1.5 million (of which $400,000 was for the roof); December 1, $1.5 million (of which $700,000 was for the building HVAC).

Additional information follows:

1. Other debt outstanding:
$4-million, 10-year, 13% bond, dated December 31, 2013, with interest payable annually
$1.6-million, six-year, 10% note, dated December 31, 2017, with interest payable annually

2. The March 1, 2020 expenditure included land costs of $150,000.

3. Interest revenue earned in 2020 on the unused idle construction loan amounted to $49,000.

Instructions

a. Determine the interest amount that could be capitalized in 2020 in relation to the building construction.

b. Prepare the journal entry to record the capitalization of borrowing costs and the recognition of interest expense, if any, at December 31, 2020. Round percentage allocation to two decimal places and to the nearest dollar.