I. Interest Capitalization On January 1, 2020, Jackson Company purchased land for an office site by paying $700,00 cash. Jackson began construction on the office building on January 1, 2020. The building was completed on December 31, 2020. The following expenditures were incurred for construction: Date Expenditures January 1, 2020 $1,400,000 May 1, 2020 1,200,000 August 1, 2020 2,400,000 December 31, 2020 1,500,000 To help pay for construction, $2,000,000 was borrowed on January 1, 2020, on a 9%, 5-year note payable. In addition to the construction note, the following were outstanding for all of 2020: $2,600,000, 12%, 6-year note payable $3,000,000 6% 10-year bonds payable Instructions: (a) Determine the (1) avoidable interest, (2) actual interest, and (3) interest to be capitalized. (b) Assume that to help pay for construction, $5,000,000 was borrowed on January 1, 2020, on a 9%, 5-year note payable. How much interest would be capitalized? 1