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Please explain step by step as to how you got the answer for a and b. On January 1, 2021, Lawrence Co. began construction of
Please explain step by step as to how you got the answer for a and b. On January 1, 2021, Lawrence Co. began construction of a building to be used as its office headquarters. The building is expected to be completed on December 31, 2021. Expenditures on this project during 2021 were as follows: January 1 $ 120,000 March 1" 336,000 June 1" 240,000 October 31 165,000 On Jan. 1, 2021, the company obtained a $450,000 specific construction loan with an 8% interest rate. The loan was outstanding during the entire construction period. The company's other interest-bearing debts included two long-term notes of $480,000 and $900,000 with interest rates of 10% and 11%. respectively. Both notes were outstanding during the entire construction period. Instruction: (a) Determine the amount of interest capitalized for 2021. Please show your work (i.e. the weighted average accumulated expenditure, the actual interest, the weighted average interest rate, and the avoidable interest) to support your final answer. Please round the WA interest rate to four decimal places when necessary. Answer: The amount of interest capitalized for 2021 is (b) Regardless your answer in (a), determine the amount of avoidable interest for 2021 assuming that the weighted average accumulated expenditure is $370,000 (other things being equal). Answer: The amount of avoidable interest for 2021 is
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Please explain step by step as to how you got the answer for a and b.
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