Exercise 4-20 (Algorithmic) (LO. 2)

On January 1, 2020, Kunto, a cash basis taxpayer, pays $49,926 for a 24-month certificate. The certificate is priced to yield 4% (the effective interest rate) with interest compounded annually. No interest is paid until maturity, when Kunto receives $54,000.

In your computations, round any amounts to the nearest dollar.

a. Compute Kunto's gross income from the certificate for 2020. $fill in the blank 1

b. Compute Kunto's gross income from the certificate for 2021. $fill in the blank 2