n January 1, 2024, the Mason Manufacturing Company began construction of a building to be...
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Accounting
n January 1, 2024, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2025. Expenditures on the project were as follows:
January 1, 2024
$ 1,200,000
March 1, 2024
900,000
June 30, 2024
1,100,000
October 1, 2024
900,000
January 31, 2025
315,000
April 30, 2025
648,000
August 31, 2025
945,000
On January 1, 2024, the company obtained a $3,500,000 construction loan with a 12% interest rate. The loan was outstanding all of 2024 and 2025. The companys other interest-bearing debt included two long-term notes of $3,000,000 and $7,000,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during all of 2024 and 2025. Interest is paid annually on all debt. The companys fiscal year-end is December 31.
Required:
Calculate the amount of interest that Mason should capitalize in 2024 and 2025 using the specific interest method.
What is the total cost of the building?
Calculate the amount of interest expense that will appear in the 2024 and 2025 income statements.
PLEASE HELP AND EXPLAIN. LAST PERSON DID NOT GET THIS RIGHT
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