Problem 3 (21 points) Zappos Company is constructing a warehouse that takes 12 months to complete and qualifies for interest capitalization. The following information is available in 2014. Construction starts on January 1, 2014. Capitalization period: January 1, 2014, to December 31st 2014. Expenditure on project: $1,153,846 at the beginning of EVERY MONTH for the entire year of 2014. The fiscal year end is December 31st every year. 6 million borrowed at 3 years at 12% on Jan 1st 2014, specially for constructing a warehouse. 4 million borrowed at 10 years at 10% on Jan 1st 2014, general debt. 2 million borrowed at 20 years at 15% on Jan 1st 2014, general debt. (a) Compute the amount of interest costs capitalized. (Show your FULL workings and round to the nearest dollar.) (10 points) (b) Prepare ONLY journal entries necessary on December 31, 2014. (Note: You don't need to prepare journal entries for other dates throughout the year.) (5 points) (c) Upon completion of the construction of the warehouse on Dec 31, 2014, Zappos received government grant of $5,000,000. The government grant Zappos received was deducted in arriving the balance sheet carrying value of the warehouse. Prepare the additional journal entry based on the information. What is the amount Zappos recorded as the cost of the warehouse after it received government grant? Show your calculation to get credit. (2 points) (d) Continue with part (c), in May 1, 2015 (Note: NOT January 1, 2015), Zappos started to use the warehouse. The warehouse was estimated to have a useful life of ten years and no residual value. The company has recorded depreciation using the sum-of- the-years' digit method. On March 1, 2024, the warehouse was sold for $24,000. What should be the gain/loss recognized from the sale of the warehouse? Note: Partial year depreciation applies. (Show your FULL workings and round to the nearest dollar) (4 points)