Early in its fiscal year ending December 31, 2014, CYZ Apparel Co. finalized plans to expand operations. The first stage was completed on February 28 with the purchase of a tract of land on the outskirts of the city. CYZ paid $200,000 and signed a noninterest-bearing note requiring the company to pay $600,000 on February 28, 2016. An interest rate of 7% properly reflects the time value of money for this type of loan agreement. Title search, insurance, and other closing costs totaling $20,000 were paid at closing. During March, the old building was demolished at a cost of $65,000, and an additional $40,000 was paid to clear and grade the land. Construction of a new building began on June 1 and was completed on November 30. Construction expenditures were as follows: June 1 August 1 September 1 October 1 $1,100,000 1,300,000 1,500,000 900,000 CYZ borrowed $4,000,000 at 7% on May 1 to help finance construction. This loan, plus interest, will be paid in 2015. The company also had the following debt outstanding throughout 2014: $4,000,000, 8% long-term note payable $2,500,000, 7.5% long-term bonds payable. In November, the company purchased 12 identical pieces of equipment and office furniture for a lump- sum price of $650,000. The fair values of the equipment and the furniture were $455,000 and $245,000, respectively. In December, CYZ paid a contractor $300,000 for the construction of parking lots and for landscaping