Question
On January 1, 2013, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on
On January 1, 2013, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2014. |
Expenditures on the project were as follows: |
January 1, 2013 | $ | 1,050,000 | |
March 1, 2013 | 630,000 | ||
June 30, 2013 | 710,000 | ||
October 1, 2013 | 610,000 | ||
January 31, 2014 | 315,000 | ||
April 30, 2014 | 630,000 | ||
August 31, 2014 | 990,000 | ||
On January 1, 2013, the company obtained a $3 million construction loan with a 12% interest rate. The loan was outstanding all of 2013 and 2014. The companys other interest-bearing debt included two long-term notes of $4,100,000 and $6,100,000 with interest rates of 5% and 7%, respectively. Both notes were outstanding during all of 2013 and 2014. Interest is paid annually on all debt. The companys fiscal year-end is December 31. |
Required: |
1. | Calculate the amount of interest that Mason should capitalize in 2013 and 2014 using the weighted-average method. (Round interest rate to 2 decimal places. Enter your answers in whole dollars.) |
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