Comprehensive Interest Capitalization Problem

On January $1,$ Mondello Co$.$ contracted with Smithfield Co$.$ to construct a building for

$$699,000.$ The cost of the land was $$20,000$ and was included in the first payment.

The following expenditures were incurred for construction during $2009$:

April $1$$$74,000$

June $1,270,000$

The building was completed and occupied on July $31.$ To help pay for construction,

$$80,000$ was borrowed on March $1$ on a $10\%,$ three$-$year note payable. The only other

debt outstanding during the year was a $$600,000,15\%$ note issued two years ago and

$$700,000,11\%$ bonds issued two years ago.

$($a$)$ Calculate the weighted$-$average accumulated expenditures.

$($b$)$ Calculate the weighted average interest rate.

$($c$)$ Calculate avoidable interest.

$($d$)$ Calculate actual interest.

$($e$)$ What is the capitalized interest?

$($f$)$ Prepare the necessary journal entries.

$($g$)$ Illustrate$/$indicate how the interest expense and capitalized interest would be

recorded in the financial statements.