On September 1, 2025, Sustainable Living Inc. contracted Solar Solutions Ltd. to install solar panels for $700,000. Sustainable Living Inc. made payments for the installation as follows: October 1, $200,000, December 1, $300,000, March 1, $200,000. The installation was completed, and the solar panels were operational on March 31, 2026. Sustainable Living Inc. had the following outstanding debt as of December 31, 2026:

i) 10% four-year note to finance the installation, dated September 1, 2025, with interest payable annually on December 31. Principal amount: $400,000. ii) 6% six-year note payable, dated September 1, 2022, with interest payable annually on December 31. Principal amount: $300,000.

Required: i) Determine the amount of interest to be capitalized in 2026 in relation to the solar panel installation. (6 marks) ii) Prepare journal entries for Sustainable Living Inc. during 2026.