On January 1, 2677, TechGenius Inc. contracted Construction Masters to build a new research and development facility for $2,500,000. TechGenius Inc. made payments for the construction as follows: February 1, $600,000, April 1, $900,000, July 1, $1,000,000. The construction was completed, and the facility was ready for use on July 31, 2678. TechGenius Inc. had the following outstanding debt as of December 31, 2678:

i) 12% three-year note to finance the construction, dated January 1, 2677, with interest payable annually on December 31. Principal amount: $1,500,000. ii) 7% five-year note payable, dated January 1, 2674, with interest payable annually on December 31. Principal amount: $1,000,000.

Required: i) Determine the amount of interest to be capitalized in 2678 in relation to the construction of the research and development facility. (6 marks) ii) Prepare journal entries for TechGenius Inc. during 2678.