Question 1 (7 points) On February 1, 2020, Nillson Foods Ltd. purchased a new food processing machine that will cost a total of $2,000,000. The cost includes the machine and customization to be performed by the vendor. Payments for the machine were as follows: February 1 - $800,000; April 1 - $700,000 and June 1 + $500,000. Customization of the machine was completed on May 15 and the machine was delivered to Nillson's factory and put into service on June 1, 2020. On March 31, 2020, Nillson borrowed $700,000 at an annual rate of 7% to finance the purchase of the new machine. In addition to the loan for the machine, the company had the following capital structure and borrowing costs for the year: Average Balance Borrowing Cost Bonds payable (8% Issued at $1,000,000 $80,000 par) Operating line of credit (6%) $3,000,000 $180,000 Equity financing $1,000,000 . Nillson expenses interest as it is incurred. Required: a) Calculate the average borrowing rate on general borrowings for Nillson. (2 marks) b) Calculate the amount of interest that is to be capitalized as part of the machine asset. (3 marks) c) Prepare the adjusting journal entry to capitalize borrowing costs on the machine in 2020. (2 marks) ... Cormat B I U >