On January 1, 2018, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2019. The company borrowed $1,500,000 at 8% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2018:
$5,000,000, 12% bonds
$3,000,000, 8% long-term note
Construction expenditures incurred during 2018 were as follows:
January 1 ............................... $ 600,000
March 31 ................................ 1,200,000
June 30 .................................. 800,000
September 30 ........................... 600,000
December 31 ........................... 400,000
Required:
Calculate the amount of interest capitalized for 2018 using the specific interest method.