Bullock Company is constructing a building for its own use and has been capitalizing interest based on average expenditures on a quarterly basis since the project began last year. The following expenditures are made during the first quarter: January $1,$ $$6,720,000$; February $1,$ $$6,120,000$; and March $31,$ $$8,760,000.$ Bullock had the following debts outstanding during this quarter.

Debt Amount

Note payable, $10\%,$ incurred specifically to finance construction $$3,840,000$

Short$-$term note payable, $15\%6,000,000$

Mortgage note payable, $8\%2,880,000$

a$.$ Compute $(1)$ interest to be capitalized and $(2)$ interest to be expensed for this first quarter.

Calculation of Actual Interest for the First Quarter

Debt Annual Quarterly

Debt Amount Interest rate Interest Amount

Specific Debt

Construction loan Answer

Answer

Answer

General Debt

Note payable Answer

Answer

Answer

Mortgage note payable Answer

Answer

Answer

Total

$0$

Calculation of Weighted Average Accumulated Expenditures for First Quarter

Date Expenditures Months Outstanding WA Accum. Expenditures

January $1$ Answer

Answer

Answer

February $1$ Answer

Answer

Answer

March $31$ Answer

Answer

Answer

Total

$0$

Calculation of quarterly interest rates used in the schedule that follows

First Quarter Interest $-$: Debt Amount $=$ Quarterly Interest Rate

Specific Debt Answer

$-$: Answer

$=$

General Debt Answer

$-$: Answer

$=$

Calculation of Avoidable Interest

Weighted Average

Accumulated Quarterly Avoidable

Debt Category Expenditures Interest Rate Interest

Specific Debt Answer

$0$

$0$

General Debt Answer

$0$

$0$

Total Answer

Answer

$1.$ Capitalized Interest Answer

$2.$ Interest expense Answer

b$.$ Prepare the entry to record the construction expenditures and the interest for the first quarter. Assume all payments are in cash.

Account Name Dr$.$ Cr$.$

Answer

Answer

Answer

To record construction expenditures and interest.