On january 1, 2024, a company began construction of an automated cattle feeder system. the system was finished and ready for use on september 30, 2025. expenditures on the project were as follows:
january 1, 2024 $ 200,000
september 1, 2024 $ 300,000
december 31, 2024 $ 300,000
march 31, 2025 $ 300,000
september 30, 2025 $ 200,000
the company borrowed $750,000 on a construction loan at 12% interest on january 1, 2024. this loan was outstanding throughout the construction period. the company had $4,500,000 in 9% bonds payable outstanding in 2024 and 2025.
interest (using the specific interest method) capitalized for 2025 was:
$86,805.
$87,875.
$67,500.
$104,625.