How much interest must be capitalized in the cost

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Reference no: EM13775630

Bee Wood, Inc., a construction company, decides to build a new warehouse. The following information is applicable to the project:

-Construction will begin January 1, 2016, and is expected to end December 31,2017

-Construction costs are estimated at $640,000

-A 12%, 2-year loan of $200,000 has been obtained and will become effective on January 1, 2016

-Bee Wood, Inc.'s other debts are as follows

5-year, 10% notes payable $75,000

9% mortgage $120,000

-2016 expenditures were as follows

January 1: $100,000

July 1: $100,000

October 1: $100,000

In 2017, expenditures of $340,000 occurred on February 1, and the project was completed on July 1, 2017. How much interest must be capitalized in the cost of the new warehouse for 2016 and 2017?

Reference no: EM13775630

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