Question: Glassman Corporation constructed a warehouse to handle storing materials for its products. Construction began on May 2014 and will likely be completed in December 2015. Expenditures for 2014 related to construction were as follows:
July 1 $2,400,000
September 1 $1,800,000
December 1 $3,600,000
To finance the construction of the building, Glassman borrowed $1,500,000 on May 1, 2014. The term of the note was 7 years at 4%. In addition, the company had outstanding for the entire year the following notes payable:
$3,000,000 6-year note at 6%
$7,000,000 10-year note at 5%
a. Compute the avoidable interest for Glassman for 2014.
b. Record the December 31, 2014 entry for the payment of interest on all the notes.