On December 31, 2019, Jumble Inc. borrowed $1,000,000 at 12% payable annually to finance the construction of a new building. The building was completed in April 2021. Additional information is provided as follows: In 2020, the company made the following expenditures related to this building:

March 1, $600,000;

June 1, $900,000;

September 1, $1,500,000;

December 31, $600,000.

Other debt outstanding

1) $10,000,000, 10-year, 10% bond, dated December 31, 2013, interest payable annually

2$2,500,000, 15-year, 11% note, dated December 31, 2007, interest payable annually

Instructions

(a) Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building. (3 points total. To receive partical credits, show your calculations of weighted-average accumulated expenditures 1 point, actual interest 1 poing, avoidable interest 1 point)

(b) Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31, 2020. (1 point)