On January 1, 2018, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2019. Expenditures on the project were as follows:

January 1, 2018	$	1,000,000
March 1, 2018		600,000
June 30, 2018		800,000
October 1, 2018		600,000
January 31, 2019		270,000
April 30, 2019		585,000
August 31, 2019		900,000

On January 1, 2018, the company obtained a $3 million construction loan with a 10% interest rate. The loan was outstanding all of 2018 and 2019. The companys other interest-bearing debt included two long-term notes of $4,000,000 and $6,000,000 with interest rates of 6% and 8%, respectively. Both notes were outstanding during all of 2018 and 2019. 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 2018 and 2019 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 2018 and 2019 income statements.

Req 1 and 3

	2018	2019
Interest Capitalized
Interest Expense

Req 2

Total Cost of Building