Business, 30.06.2020 17:01 ljohnson135

On January 1, 2021, the company obtained a $3 million loan with a 14% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 $ 1,050,000March 1, 2021 870,000June 30, 2021 390,000October 1, 2021 690,000January 31, 2022 675,000April 30, 2022 990,000August 31, 2022 1,710,000On January 1, 2021, the company obtained a $3 million construction loan with a 14% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company’s other interest-bearing debt included two long-term notes of $4,900,000 and $6,900,000 with interest rates of 5% and 7%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company’s fiscal year-end is December 31.
Required:
1. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the weighted-average method.
2. What is the total cost of the building?
3. Calculate the amount of interest expense that will appear in the 2021 and 2022 income statements.

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On January 1, 2021, the company obtained a $3 million loan with a 14% interest rate. The building wa...

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