On January 3, 20X5, Brighton, Inc. began construction of an automated cattle feeder system. Expenditures on the project during 20X5 were as follows:

January 2, 20X5 $800,000

September 1, 20X5 $300,000

December 31, 20X5 $300,000

The company borrowed $750,000 on a construction loan at 12% interest on January 2, 20X5. The company also had two other loans outstanding at the beginning of 20X5 of $600,000 at 7% and $200,000 at 10%. Both loans were outstanding all year long.

Required:

a. Calculate the Average accumulated expenditures for 20X5:

b. How much interest should be capitalized during 20X5?