Laserwords Inc. is a book distributor that had been operating in its original facility since 1987. The increase in certification programs and continuing education requirements in several professions has contributed to an annual growth rate of 15% for Laserwords since 2009. Laserwords original facility became obsolete by early 2014 because of the increased sales volume and the fact that Laserwords now carries CDs in addition to books. On June 1, 2014, Laserwords contracted with Black Construction to have a new building constructed for $4,160,000 on land owned by Laserwords. The payments made by Laserwords to Black Construction are shown in the schedule below.

Construction was completed and the building was ready for occupancy on May 27, 2015. Laserwords had no new borrowings directly associated with the new building but had the following debt outstanding at May 31, 2015, the end of its fiscal year. 8%, 5-year note payable of $2,080,000, dated April 1, 2011, with interest payable annually on April 1. 10%, 10-year bond issue of $3,120,000 sold at par on June 30, 2007, with interest payable annually on June 30. The new building qualifies for interest capitalization. The effect of capitalizing the interest on the new building, compared with the effect of expensing the interest, is material.

Compute the following:

a) Weighted-average accumulated expenditures on Laserwords new building during the capitalization period.

b) The avoidable interest on Laserwords new building.

c) Some interest cost of Laserwords Inc. is capitalized for the year ended May 31, 2015. Compute the amount of each items that must be disclosed in Laserwords financial statements.

Please explain - don't just add the answer!

Date Amount July 30, 2014 January 30, 2015 May 30, 2015 $936,000 1,560,000 1,664,000 $4,160,000 Total payments