On 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 $1,2024$ $ $1,710,000$

March $1,20241,320,000$

June $30,20241,520,000$

October $1,20241,320,000$

January $31,2025378,000$

April $30,2025711,000$

August $31,20251,008,000$

On January $1,2024,$ the company obtained a $$4,200,000$ construction loan with a $16\%$ interest rate. The loan was outstanding all of $2024$ and $2025.$ The company$$s other interest$-$bearing debt included two long$-$term notes of $$4,000,000$ and $$6,000,000$ with interest rates of $12\%$ and $14\%,$ respectively. Both notes were outstanding during all of $2024$ and $2025.$ Interest is paid annually on all debt. The company$$s fiscal year$-$end is December $31.$

Required:

$1.$ Calculate the amount of interest that Mason should capitalize in $2024$ and $2025$ using the specific interest method.

$3.$ Calculate the amount of interest expense that will appear in the $2024$ and $2025$ income statements.

Note: Enter your answers in whole dollars and not in millions. Do not round intermediate calculations.

$20242025$

$1.$ Interest capitalized

$3.$ Interest expensed

$2.$ What is the total cost of the building?

Note: Enter your answers in whole dollars and not in millions. Do not round intermediate calculations.

$2.$ Total cost of building

Answer rating: 100% (QA)

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