Question three: (25 marks)

On June1, 2019, Sun Construction began construction of a new building for its use. The building was finished and ready for use on May31, 2021. Expenditures for the construction were as follows:

Cost of land paid in June1, 2019 $1,800,000

September 1/2019 600,000

December 31, 2019 800,000

march 31, 2020 395,000

May 31,2020 375,000

November 1,2020 562,500

January 31,2021 37,806

April 30,2021 148403

Sun Construction borrowed $700,000 on a construction loan at 5% interest on June1,2019. This loan was outstanding during the construction period. The company also had the following outstanding loan during the period:

$7,000,000, 7. % bonds

$ 5,000,000, 4% mortgage.

Required

1-Compute the amount of capitalize interest, if any, in December31, 2019, 2020and 2021.

2-Journalize the entries in December31, 2019, 31/12/2020,31/05/2021 (assuming the company use straight line method for depreciation with 50 years useful life and no salvage value)