On January 1, 2022, Union Power and Light commenced construction of a new generating plant to serve the northeast corridor of the state. The total cost of the project is $4,100,000, and it will be completed on June 1, 2023. Scheduled payments to contractors are summarized in the following table.

To finance the project, Union Power obtained a bank loan on January 1, 2022, for $1,800,000 at 10% interest. Union’s other general (or indirect) outstanding debt during 2022 and 2023 includes the following:

All debt was issued at par and is outstanding for the full year. Interest for all debt is paid on December 31.

Requireda. Determine the amount of interest to be capitalized and expensed by Union Power Company for both 2022 and 2023.

b. Prepare all journal entries required.

c. Determine the final valuation of the power plant.

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Date January 1, 2022 April 1, 2022 July 1, 2022 Total 2022 February 1, 2023 April 1, 2023 Total 2023 Total expenditures Amount Paid $ 950,000 300,000 1,200,000 $2,450,000 $1,150,000 500,000 $1,650,000 $4,100,000