A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $630,000; March 31, $730,000; June 30, $530,000; October 30, $990,000. The company arranged a 8% loan on January 1 for $960,000. Assume the $960,000 loan is not specifically tied to the construction of the building. The company's other borrowings, outstanding for the whole year, consisted of a $4 million loan and a $6 million note with interest rates of 13% and 7%, respectively. Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year. Note: Enter your answers in whole dollars and not in millions. Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34%). Date January 1 March 31 June 30 October 30 Accumulated expenditures Average accumulated expenditures All loans Answer is complete but not entirely correct. Expenditure $ 630,000 730,000 530,000 X 990,000 X $ 2,880,000 Amount $ 1,607,500 4,000,000 X X X Weight 12/12 = $ 9/12✔ 6/12 = 2/12 Interest Rate 19.00 9.40 % % = = = = 630,000 547,500 265,000 165,000 $ 1,607,500 Capitalized Interest $ Average $ 760,000 760,000

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required…