Interest During Construction

Matrix Inc. borrowed $1,100,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was completed on October 31, 2019. Expenditures related to this building were:

January 1 $252,000 (includes cost of purchasing land of $150,000)

May 1 310,000

July 1 420,000

October 31 280,000

In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the entire year.

Required:

Compute the amount of interest capitalized related to the construction of the building.

$fill in the blank 1

If the expenditures are assumed to have been incurred evenly throughout the year:

Compute weighted average accumulated expenditures

$fill in the blank 2

Compute the amount of interest capitalized on the building

$fill in the blank 3

Interest During Construction Matrix Inc. borrowed $1,100,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was completed on October 31, 2019. Expenditures related to this building were: January 1 $252,000 (includes cost of purchasing land of $150,000) May 1 310,000 July 1 420,000 October 31 280,000 In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the entire year Required: 1. Compute the amount of interest capitalized related to the construction of the building, 2. If the expenditures are assumed to have been incurred evenly throughout the year: Compute welghted average accumulated expenditures Compute the amount of interest capitalized on the building