1. California, Inc., through no fault of its own, lost an entire warehouse due to an earthquake on May 1, 2021.

In preparing its insurance claim on the inventory loss, the company prepared the following data:

Inventory January 1, 2021: $300,000 Sales from January 1 to May 1: $1,400,000 Purchases from January 1 to May 1: $875,000 California consistently reports a 30% gross profit.

Using the gross profit method, what amount of inventory would California estimate to have lost on May 1, 2021?

2. On January 1, 2021, the Sacramento Corporation began construction on a new manufacturing facility for its own use. The building was completed in 2022. The only interest-bearing debt the company had outstanding during 2021 was $10,000,000 of long-term bonds having and an effective interest rate of 6%.

Construction expenditures incurred during 2021 were as follows:

January 1 $600,000 April 1 $900,000 September 1 $300,000 December 31 $1,000,000

What amount of capitalized interest would Sacramento Corporation record for 2021?