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Compute the avoidable interest on this project

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Reference no: EM132765623

Question - SkysongFurniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $8,000,000 on January 1, 2020. Skysong expected to complete the building by December 31, 2020. Skysong has the following debt obligations outstanding during the construction period.

Construction loan-12% interest, payable semiannually, issued December 31, 2019: $3,200,000

Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2021: 2,240,000

Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2024: 1,600,000

Required - Assume that Skysong completed the office and warehouse building on December 31, 2020, as planned at a total cost of $8,320,000, and the weighted-average amount of accumulated expenditures was $5,760,000. Compute the avoidable interest on this project.

Reference no: EM132765623

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