Prepare the journal entry to record the capitalization

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Question - On December 31, 2013, Main Inc. borrowed $7,380,000 at 13% payable annually to finance the construction of a new building.

In 2014, the company made the following expenditures related to this building: March 1, $885,600; June 1, $1,476,000; July 1, $3,690,000; December 1, $3,690,000. The building was completed in February 2015. Additional information is provided as follows.

1. Other debt outstanding 10-year, 12% bond, December 31, 2007, interest payable annually $9,840,000 6-year, 11% note, dated December 31, 2011, interest payable annually $3,936,000

2. March 1, 2014, expenditure included land costs of $369,000

3. Interest revenue earned in 2014 $120,540

Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31, 2014.

Reference no: EM132011067

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