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On September 1, 2724, EcoTech Solutions Inc. contracted Solar Power Innovations to install solar panels for $800,000. EcoTech Solutions Inc. made payments for the installation


On September 1, 2724, EcoTech Solutions Inc. contracted Solar Power Innovations to install solar panels for $800,000. EcoTech Solutions Inc. made payments for the installation as follows: October 1, $200,000, December 1, $400,000, March 1, $200,000. The installation was completed, and the solar panels were operational on March 31, 2725. EcoTech Solutions Inc. had the following outstanding debt as of December 31, 2725:

i) 10% four-year note to finance the installation, dated September 1, 2724, with interest payable annually on December 31. Principal amount: $500,000. ii) 6% six-year note payable, dated September 1, 2721, with interest payable annually on December 31. Principal amount: $300,000.

Required: i) Determine the amount of interest to be capitalized in 2725 in relation to the solar panel installation. (6 marks) ii) Prepare journal entries for EcoTech Solutions Inc. during 2725.

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