(Capitalization of Interest) On December 31, 2009, Hurston Inc. borrowed $3,000,000 at 12% payable annually to finance the construction of a new building. In 2010, the company made the following expenditures related to this building: March 1, $360,000; June 1, $600,000; July 1, $1,500,000; December 1, $1,200,000. Additional information is provided as follows.

1. Other debt outstanding

10-year, 11% bond, December 31, 2003, interest payable annually $4,000,000

6-year, 10% note, dated December 31, 2007, interest payable annually $1,600,000

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

Hint: Expenditure for land can be included in calculating weighted average accumulated expenditures

14. Determine the amount of weighted average accumulated expenditure in 2010 in relation to the construction of the building.

a. 1,500,000 b. 3,660,000 c. 1,600,000

15. Determine the amount of interest to be capitalized in 2010 in relation to the construction of the building.

a.180,000 b. 960,000 c. 780,000

16. Determine the total actual interest expenses incurred in year 2010.

a.180,000 b. 960,000 c. 780,000