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SkysongFurniture Company started construction of a combination office

and warehouse building for its own use at an estimated cost of $8,000,000 on January 1, 2020. Skysong expected to complete the building by December 31, 2020. Skysong has the following debt obligations outstanding during the construction period.


Construction loan-12% interest, payable semiannually, issued December 31, 2019: $3,200,000
Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2021: 2,240,000
Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2024: 1,600,000
(a)
Assume that Skysong completed the office and warehouse building on December 31, 2020, as planned at a total cost of $8,320,000, and the weighted-average amount of accumulated expenditures was $5,760,000. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final answers to 0 decimal places, e.g. 5,275.)


Avoidable Interest$

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