Computing and Recording Interest Capitalization 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, $1,960,000 February 1, $1,785,000 and March 31, $2,555,000 Bullock had the following debts outstanding during this quarter Debt Amount Note payable, 10 , incurred specifically to finance construction $1,120,000 Short term note payable, 15 1,750,000 Mortgage note payable, 8 840,000 Answer the following questions, rounding your answers to the nearest whole number a Compute interest to be capitalized and interest to be expensed for this first quarter Amount of interest to be capitalized Amount of interest to expense b Prepare the entry to record the construction expenditures and the interest Note Record the debit accounts in alphabetical order using the first letter of the account name Account Name Dr Cr

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Computing and Recording Interest Capitalization Bullock Company is constructing a building for its own use and has been capitalizing interest based on average expenditures on

Computing and Recording Interest Capitalization

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, $1,960,000; February 1, $1,785,000; and March 31, $2,555,000. Bullock had the following debts outstanding during this quarter.

Debt	Amount
Note payable, 10%, incurred specifically to finance construction	$1,120,000
Short-term note payable, 15%	1,750,000
Mortgage note payable, 8%	840,000

Answer the following questions, rounding your answers to the nearest whole number. a. Compute interest to be capitalized and interest to be expensed for this first quarter.

Amount of interest to be capitalized
Amount of interest to expense

b. Prepare the entry to record the construction expenditures and the interest. Note: Record the debit accounts in alphabetical order using the first letter of the account name.