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On May 1, 2020 a company started constructing a manufacturing facility which was completed on March 31, 2021. You have the following information about the

On May 1, 2020 a company started constructing a manufacturing facility which was completed on March 31, 2021. You have the following information about the direct costs incurred on the construction project in 2020:

May 1 3,100,000

July 31 4,600,000

October 30 4,200,000

December 1 150,000

All the costs have been debited to the Construction in Progress account. The company took a loan for the project of $3,000,000 on June 1, 2020. The annual interest rate is 4%.

The companys borrowings include:

Bank loan, 6% issued March 1, 2020 $8,800,000

Note payable 4% issued September 30, 2019 $2,500,000

The total cost of the manufacturing facility should be recorded in the long-term asset account, Manufacturing Facility under construction.

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

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