1. Riley Company borrowed $34,000 on April 1, Year 1 from the Titan Bank. The note issued by Riley carried a one year term and a 4% annual interest rate. Riley earned cash revenue of $1,000 in Year 1 and $800 in Year 2. Assume no other transactions.

The amount of net income on the Year 2 income statement would be:

Multiple Choice

a) $340.

b) $460.

c) $(120).

d) $1,140.