JUST P 10-10

On January 1, 2021, the Mason Manufacturing Company began construction of a headquarters. The building was completed on September 30, 2022. Expenditures on the project were as follows. P 10-9 Interest capitalization; specific interest method January 1, 2021 March 1, 2021 $1,000,000 600,000 800,000 600,000 270,000 585,000 900,000 June 30, 2021 October 1, 2021 January 31, 2022 April 30, 2022 August 31, 2022 LO10-7 On January 1, 2021, the company obtained a $3 million construction lon with a 10% interest rate. The loan was outstanding all of 2021 and 2022. The company's other interest-bearing debt included two long-term notes of 00$4,000,000 and $6,000,000 with interest rates of 6% and 8%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company's fiscal year-end is December 31. Required: 1. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the specific interest method. 2. What is the total cost of the building? 3. Calculate the amount of interest expense that will appear in the 2021 and 2022 income statements. [This is a variation of the previous problem, modified to focus on the weighted-average interest method.] P 10-10 Interest Required: Refer to the facts in Problem 10-9 but now assume the $3 million loan is not specifically tied to construction of the building. Answer the following questions: 1. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the weighted-average method. 2. What is the total cost of the building? 3. Calculate the amount of interest expense that will appear in the 2021 and 2022 income statements. capitalization; weighted-average method LO10-7 000