A company decided to self-construct a new greenhouse at its farm. On 1/1/21, they purchased land for the project at a cost of $130,000. The construction project began on 3/1/21. The company made the following expenditures prior to completing the project on 10/31/2021.

Date   Payment

3/1/21 $700,000

9/1/21 $130,000

Borrowings are as follows:

• On 1/1/21 the company took out a 2 year 10% construction loan for $200,000.

• On 1/1/19 the company took out a $800,000 8% note payable due in 10 years.

  1. Compute the actual interest for 2021.

  2. Compute the company's avoidable interest for 2021.

  3. Draw the interest expense T-account for 2021. Circle the interest expense that will appear on the company's 2021 income statement?

  4. The company is so excited. Thanks to the bankruptcy of a local competitor, they were able to buy equipment worth $17,000 and a small portable greenhouse building worth $95,000 for a lump sum bargain price of $90,000. What is the journal entry the company will record?