The following information is from Bowin Inc. for a long$-$term construction project that is expected to be completed in January of next year. The construction project is for a building intended for the company$$s own use. The capital expenditure on January $1$ of the current year is for the purchase of land for the building site. No new construction loans were opened for the project during the year. All debt was outstanding for the full year.

Capital Expenditures for Current Year

Date Actual Expenditures

Jan. $1$ $$54,000$

Mar. $311,620,000$

June $303,240,000$

Nov. $301,620,000$

Outstanding Debt in Current Year

Debt Debt Amount Interest Rate

Note payable $$1,800,0008\%$

Note payable $1,440,0008\%$

Bond payable $3,600,00010\%$

Note payable $900,0009\%$

Compute Interest to Capitalize and Expense

Journal Entry in Year $1$

Journal Entries in Year $2$

a$.$ Compute $(1)$ interest to be capitalized and $(2)$ interest to be expensed, during the year.

Calculation of Actual Interest

Debt Debt Amount Interest rate Interest Amount

Specific Debt

Construction loan

General Debt

Note payable

Note payable

Bond payable

Note payable

Total

Calculation of Weighted Average Accumulated Expenditures

Date Expenditures Months Outstanding WA Accum. Expenditures

January $1$

March $31$

June $30$

November $30$

Total

Calculation of annual interest rate used in the schedule that follows

Numerator $-$: Denominator $=$ Interest Rate

General Debt

$-$:

$=$

Calculation of Avoidable Interest

Weighted Average

Accumulated Interest Avoidable

Debt Category Expenditures Rate Interest

Specific Debt

General Debt

Total

$1.$ Capitalized Interest

$2.$ Interest expense