QUESTION 19

1. During 2019, Bell Building Company constructed various assets at a total cost of $4,200,000. The weighted average accumulated expenditures on assets qualifying for capitalization of interest during 2019 were $2,700,000. The company had the following debt outstanding at December 31, 2019:

   1. 10%, 5-year note to finance construction of various assets, dated January 1, 2019, with interest payable annually on January 1: $1,800,000

   2. 12%, ten-year bonds issued at par on December 31, 2014, with interest payable annually on December 31: $2,000,000

   3. 9%, 3-year note payable, dated January 1, 2018, with interest payable annually on January 1: $1,000,000

   Compute each of the following amounts:

   1. Total interest on debt for 2019.
   2. Total interest to be capitalized during 2019.
   3. Total interest to be expensed during 2019.

   4. Prepare the journal entry to capitalize/expense total interest on debt during 2019 in (1) above.