During 2015 J & J completed the construction of a new warehouse in the North Carolina. Construction began on January 1, 2014. The cost of the new warehouse was $3M with the cost incurred evenly throughout the construction. The following information is provided: J & J incremental interest rate is 8% Actual interest incurred during 2015 was $135,000. The average accumulated expenditures was $1,5M Requirement:
a. How much interest should be calculated?
b. What is the entry to capitalize the interest?