Earlyin2012,DobbsCorporationengagedKiner,Inc.todesignandconstructacompletemodernizationofDobbs'smanufacturingfacility.ConstructionwasbegunonJune1,2012andwascompleted onDecember31, 2012.DobbsmadethefollowingpaymentstoKiner,Inc.during2012:

DatePayment

June1,2012$4,800,000

August31, 20127,200,000

December31,20126,000,000

Inordertohelpfinancetheconstruction,Dobbsissuedthefollowingduring2012:

1.$4,000,000of10-year,9%bondspayable,issuedatparonMay31,2012withinterestpayableannuallyonMay31.

2.1,000,000sharesofno-parcommonstock,issuedat$10pershareonOctober1,

2012.

Inaddition tothe9%bondspayable, theonlydebtoutstandingduring 2012wasa

$1,000,000,12%notepayabledatedJanuary1,2008anddueJanuary1,2018withinterest payableannually onJanuary1.

Instructions

Computetheamountsofeachofthefollowing(showcomputations):

1.Weighted-averageaccumulatedexpendituresqualifying forcapitalizationofinterestcost.

2.Avoidableinterest incurred during2012.

3.Totalamount ofinterestcosttobecapitalizedduring2012.