Exchange Resulting in Note Receivable Bonnet Corporation exchanged land for a 4-year $250,000 note receivable bearing an annual interest rate of 6 percent. Payments of $70,000 are to be received by Bonnet at December 31 of each of the first 3 years. Payment at the end of the fourth year is to include the unpaid balance of the note receivable plus interest for the fourth year.

a. Compute the amount Bonnet Corporation should report as interest income in each of the years and the balance of the note receivable at December 31 each year.

b. What is the total amount recorded as interest income over the 4-year period?

c. What is the total amount of cash received by Bonnet during the fourth year?