Reference no: EM133089226

Question - On January 1, the first day of its fiscal year, Steve Clothing, Inc., began construction of a building to be used for storage. The following expenditures were incurred for construction:

January 1 $90,000 April 1 $80,000

July 1 180,000 October 1 300,000

December 31 200,000

To finance the cost of construction, $50,000 was borrowed on January 1 on a 4%, three-year note payable. The only other debt outstanding during the year was a $500,000, 3 1/3% note issued two years ago.

Required -

a. Calculate the weighted-average accumulated expenditures.

b. Calculate avoidable interest.

c. Determine the amount of interest to be capitalized.

d. Prepare the journal entry to record interest for the year. Assume all interest is paid in cash.