Problem 17 On January 1, 20C0, KC Co. signed a xed-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, 20C0, KC borrowed P 4,000,000 payable on January 1, 20C4 with interest rate of 10%, to specically nance the xed-price construction contract. During 20C0, KC made payments of ? 3,000,000 under the contract. The weighted average amount of accumulated expenditure was ? 1,600,000 for the year. Interest earned from the temporary investment of the loan during 20C0 amounting to ? 50,000. In 20Cl, 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 ? 10,000,000 3-year, 13% note, interest payable annually 8,000,000 2 ear, 10% note, interest a able annuall 3,200,000 Payments under the contract were made during 20C1 as follows: ? 1,200,000 ?1,600,000 r 1,800,000 a2,400,000 Requirements: 1. Compute for the capitalizable borrowing cost for 20C0 and 20C1. 2. Prepare necessary journal entries to record borrowing cost for 20C0 and 20C1