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Calculate the amount of interest capitalized for the year

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A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $690,000; March 31, $790,000; June 30, $590,000; October 30, $1,170,000. To help finance construction, the company arranged a 10% construction loan on January 1 for $1,080,000. The company's other borrowings, outstanding for the whole year, consisted of a $4 million loan and a $6 million note with interest rates of 12% and 6%, respectively.

Problem 1: Assuming the company uses the specific interest method, calculate the amount of interest capitalized for the year. (Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34%).)

Reference no: EM132784075

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