Analyze the problem number 5

Problem 5 On January 1, 2003, the Mekus Mekus Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on June 30, 2004. Expenditures on the project were as follows: January 3, 2003 P 500,000 March 31, 2003 600,000 June 30, 2003 800,000 October 31, 2003 600,000 January 31, 2004 300,000 March 31, 2004 500,000 May 31, 2004 600,000 On January 3, 2003, the company obtained a P2 million construction loan with a 10% interest rate. The loan was outstanding all of 2003 and 2004. The company's other interest-bearing debt included a long- term note of P5,000,000 with an 8% interest rate, and a mortgage of P3,000,000 on another building with an interest rate of 6%. Both debts were outstanding during all of 2003 and 2004. The company's fiscal year end is December 31. Questions 1. The interest capitalized at the end of December 31, 2003 is: a. P 113,100 b. P 145,000 c. P 150,000 d. P 200,000 2. The interest capitalized at the end of December 31, 2004 is: a. P 145,132 b. P 159,632 C. P 290,263 d. P 319,263 3. The total cost of the Building at December 31, 2004 is: a. P 3,535,132 b. P 4,190,131 c. P 4,480,263 d. P 4,535,263 4. The total interest expense at the end of December 31, 2003 is: a. P 780,000 b. P 635,000 C. P 630,000 d. P 560,000 5. The total interest expense at the end of December 31, 2004 is: a. P 460,737 b. P 489,737 C. P 620,368 d. P 634,868