1. ABC Company is constructing a building for their own use. The company expects that it will take 18 months to build the building. The following expenditures relating to the construction of the building were made during the fiscal year 2015:

January 2, 2015 $1,500,000

April 1, 2015 1,850,000

October 1, 2015 1,100,000

December 1, 2015 972,000

Outstanding company debt:

Borrowed $3,000,000 at 9% on January 1, 2015, to fund the new building.

The company has other long-term debt, which had been outstanding all year:

Bonds payable, originally issued at face value, $1,200,000, contract rate 4%

Required: (1) Determine the amount of interest to be capitalized by ABC Company for the 2015 fiscal year using the avoidable interest method. Show the steps and supporting calculations in determining the amount. (2) Determine the total cost charged to the Office Building account for 2015. SHOW SUPPORT FOR YOUR ANSWER.