On January 15, 2020 a company started constructing an office building and it was not yet complete at their fiscal year end of December 31, 2020. The office building is a qualifying asset and the company has decided to implement the borrowing cost standard. The direct cost incurred on the construction project in 2020 was as follows:

January 15 $150,000

February 28 240,000

May 1 280,000

July 30 96,000

October 30 220,000

All of the costs have been debited to the Construction in progress account. The company took a loan for the project of $450,000 on February 28. The annual interest rate is 5%. The companys existing borrowings are a bank loan of $3,000,000 at 4% and a note payable of $300,000 with a 4.5% interest rate. The bank loan was taken out on April 1, 2020. The total cost of the project should be recorded in a longterm asset account Building under construction.

Prepare the necessary adjusting entries at December 31, 2020 to record the asset and the capitalization of borrowing costs.