Problem #1 - Capitalization of Interest Early in 2017, Dobbs Corporation engaged kiner, Inc. to design and construct a complete modernization of Dobbs's manufacturing facility. Construction was begun on June 1, 2017 and was completed on December 31, 2017. Dobbs made the following payments to Kiner, Inc. during 2017: Date Payment June 1, 2017 $2,000,000 August 31, 2017 3,000,000 December 31, 2017 2,500,000 In order to help finance the construction, Dobbs issued the following during 2017 1. Specific Construction Debt - $1,700,000 of 10-year, 9% bonds payable, issued at par on Jan 31, 2017, with interest payable annually on December 31. In addition to the 9% bonds payable, the only debt outstanding during 2017 was a $475,000, 12% note payable dated January 1, 2013 and due January 1, 2023, with interest payable annually on December 31. Instructions Compute the amounts of each of the following (Use Excel Answer Sheet.) 1. Weighted average accumulated expenditures qualifying for capitalization of interest cost. 2. Avoidable interest incurred during 2017 3. Total amount of interest cost to be capitalized during 2017 4. December 31, 2017 adjusting entry recording Interest Expense and Capitalized Interest. Required - Complete journal entry showing debit(s) and credit(s) Make sure you clearly show which one(s) are debits (left) and which one(s) credits (right) Problem #2Capitalizing Acquisition Costs Gibbs Manufacturing Co. was incorporated on 1/2/17 but was unable to begin manufacturing activities until 8/1/17 because new factory facilities were not completed until that date. The following expenditures were made: Date Item Amount 1/31/17 Purchase of land and old building on land $280,000 5/1/17 Partial payment of new building construction 210,000 8/1/17 Final payment on building construction 210,000 Additional information: 1. When the old building was removed, Gibbs paid Kwik Demolition Co. $4,000, but also received $1,500 from the sale of salvaged material. 3. Legal fees covered the following: Examination of title covering purchase of land 2,000 Legal work in connection with the building construction 1,500 4. The fire insurance premium covered premiums for a three-month construction term beginning May 1, 2017 and ending Aug 1, 2017 - $450 5. General expenses covered the following for the period 1/2/17 to 8/1/17 Plant superintendent covering supervision of new building 10,000 Instructions Determine the proper balances as of 12/31/17 for a separate land account and a separate buildings account. Use Excel Answer Sheet