Problem 16 S Company contracted with P Construction Co. to have a building constructed for P 3,000,000 on land costing P 200,000. The land was purchased from the contractor and included in the first payment. S made the following payments to the construction company during the 20C2: January 1 March 1 May 1 December 31 Total P 420,000 P 600,000 P 1,080,000 P 900,000 P 3,000,000 Construction was completed and the building was ready for occupancy at the end of 20C2. S Company had the following debt outstanding at December 31, 20C2: 15%, 3-year note to finance acquisition of land and construction of the building dated December 31, 20C1, with interest payable annually on December 31 P 1,500,000 10%, 5-year note payable, dated December 31, 20C1, with interest payable annually on December 31 1,100,000 12%, 10-year bonds issued December 31, 20C1, with interest payable annually on December 31. 1,200,000 Prepare the necessary journal entries. Problem 17 On January 1, 20CO, KC Co. signed a fixed-price contract to have IF Associates construct a major plant facility for KC's own use. It was estimated that it would take 2 years to complete the project. Also on January 1, 20CO, KC borrowed P 4,000,000 payable on January 1, 20C4 with interest rate of 10%, to specifically finance the fixed-price construction contract. During 20CO, KC made payments of P 3,000,000 under the contract. The weighted average amount of accumulated expenditure was P 1,600,000 for the year. Interest earned from the temporary investment of the loan during 20CO amounting to P 50,000. In 20C1, JAY had the following loans outstanding throughout the year. These loans were borrowed for general purposes and were used in part for the construction of the plant. 5-year, 12% bond, interest payable semi-annually P 10,000,000 3-year, 13% note, interest payable annually 8,000,000 2-year, 10% note, interest payable annually 3,200,000 Payments under the contract were made during 20C1 as follows: March 1 July 1 Sept. 30 Dec. 1 P 1,200,000 P 1,600,000 P 1,800,000 P 2,400,000 Requirements: 1. Compute for the capitalizable borrowing cost for 20CO and 20C1. 2. Prepare necessary journal entries to record borrowing cost for 20CO and 20C1