Capitalized Interest (LIVELY ACE Ch 9 Pt 2) On January 1, Year 1, Romano Tire Service, Inc. signed a contract to have a new service center built for $900,000. On the same day, Romano borrowed $400,000 to finance the construction. This is an annual loan at a stated rate of 10%. Other Debt existing on the books as of January 1, Year 1: 1) $ 500,000 @ 9% 2) $1,000,000 @ 12% Expenditures made on the project during Year 1 were as follows: 1/1 $600,000 10/1 $200,000 $800,000 1) How much interest should be capitalized? Support how you came to that conclusion. Record the journal entry to capitalize interest and pay interest for the year.