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B Inc. purchased a $40,000 bond on its issue date, July 1, Year 1. The bond pays interest at maturity, June 30, Year 4, at

B Inc. purchased a $40,000 bond on its issue date, July 1, Year 1. The bond pays interest at maturity, June 30, Year 4, at a rate of 3% compounded annually. B Inc. has a December 31 year end. What amount of interest must be included in income for Year 1?

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