(Capitalization of Interest) Harrisburg Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $ 5,000,000 on January 1, 2008. Harrisburg expected to complete the building by December 31, 2008. Harrisburg has the following debt obligations outstanding during the construction period.
Construction loan-12% interest, payable semiannually, issued
December 31, 2007 $ 2,000,000
Short-term loan-10% interest, payable monthly, and principle payable
At maturity on May 30, 2009 1,400,000
Long-term loan- 11% interest, payable on January 1 of each
Year. Principle payable on January 1, 2012 1,000,000
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