On December $31,2024,$ Oriole Inc. borrowed $$4,200,000$ at $13\%$ payable annually to finance the construction of a new building. In

$2025,$ the company made the following expenditures related to this building: March $1,$$$504,000$; June $1,$$$840,000$; July $1,$

$$2,100,000$; December $1,$$$2,100,000.$ The building was completed in February $2026.$ Additional information is provided as follows.

Other debt outstanding:

$10-$year, $14\%$ bond, December $31,2018,$ interest payable annually $$5,600,000$

$6-$year, $11\%$ note, dated December $31,2022,$ interest payable annually $,2,240,000$

March $1,2025,$ expenditure included land costs of $$210,000.$

Interest revenue of $$68,600$ earned in $2025.$

$($a$)$

Your Answer

Determine the amount of interest to be capitalized in $2025$ in relation to the construction of the building.

The amount of interest $

$($b$)$

Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December $31,$

$($Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select $"$No

Entry" for the account titles and enter $0$ for the amounts. List all debit entries before credit entries.$)$