Santa Clarita Company reported interest expense in 2011 and 2010 of $470,000 and $410,000, respectively. The balance in Accrued Interest Payable at the end of 2011, 2010, and 2009 was $51,000, $59,000, and $46,000, respectively. In addition, a note to Santa Clarita’s 2011 financial statements included the following: Interest costs related to construction in progress are capitalized as incurred. The Company capitalized $350,000 and $260,000 of interest costs during the years 2011 and 2010, respectively.

Instructions:
1. What summary journal entries would be needed to record all information related to interest in 2011 and 2010?
2. How would interest paid be disclosed in Santa Clarita’s statement of cash flows for 2011 and 2010? Santa Clarita uses the indirect method in reporting cash flow from operating activities.