Sportswear, Inc. decided to construct a new small building for additional work capacity. On February 1, 2028, Sportswear signed a contract to construct a new building for $2,000,000 on land already owned. Construction started on July 1, 2028. The payments to the contractor are as follows:

Date Amount

August 1, 2028 $500,000

November 30, 2028 840,000

April 30, 2028 660,000

Construction was completed and the building was ready for use on December 1, 2028. Sportswear borrowed $1,500,000 on July 1, 2028, to complete the project. The construction loan was a 3-year loan, with an 8% interest rate. In addition, Sportswear had the following debt outstanding the full year of 2028.

8%, 10-year note payable of $1,000,000, dated January 1, 2025, with interest payable on December 31.

6%, 20-year bond issue of $2,000,000 sold at par on July 1, 2027, with interest payable annually on December 31.

The new building qualifies for capitalization of interest.

1. Compute weighted average accumulated expenditures, avoidable interest, actual interest
2. Identify the amount of interest to be capitalized and the amount of interest to be expensed.