On December 31, 2010, Chelsea Co. provides a service for its customer Villas Boas Co. in exchange for a promissory note requiring five annual payments of $1,000 each. The payments are to occur on December 31 of each year beginning on December 31, 2011. The note does not specify any interest, and there is no market for the note. Based on the credit worthiness of Villas Boas Co. and the length of the note, it is estimated that Villas Boas Co. would have to pay 10% interest if it borrowed a similar amount from a bank. The income tax rate for Chelsea is 35%. The effect of the entries made on December 31, 2014 on net income is:

$0

An increase of $113

An increase of $162

A decrease of $162

On December 31, 2010, Chelsea Co. provides a service for its customer Villas Boas Co. in exchange for a promissory note requiring five annual payments of $1,000 each. The payments are to occur on December 31 of each year beginning on December 31, 2011. The note does not specify any interest, and there is no market for the note. Based on the credit worthiness of Villas Boas Co. and the length of the note, it is estimated that Villas Boas Co. would have to pay 10% interest if it borrowed a similar amount from a bank. How much revenue would Chelsea recognize on December 31, 2010?

$5,000

$4,337

$3,791

$0

On December 31, 2010, Chelsea Co. provides a service for its customer Villas Boas Co. in exchange for a promissory note requiring five annual payments of $1,000 each. The payments are to occur on December 31 of each year beginning on December 31, 2011. The note does not specify any interest, and there is no market for the note. Based on the credit worthiness of Villas Boas Co. and the length of the note, it is estimated that Villas Boas Co. would have to pay 10% interest if it borrowed a similar amount from a bank. The carrying value of the note on Chelseas balance sheet on December 31, 2011? $4,041 $3,737 $3,170 $2,992 14. On December 31, 2010, Chelsea Co. provides a service for its customer Villas Boas Co. in exchange for a promissory note requiring five annual payments of $1,000 each. The payments are to occur on December 31 of each year beginning on December 31, 2011. The note does not specify any interest, and there is no market for the note. Based on the credit worthiness of Villas Boas Co. and the length of the note, it is estimated that Villas Boas Co. would have to pay 10% interest if it borrowed a similar amount from a bank. The carrying value of the note on Chelseas balance sheet on December 31, 2012?

$4,041

$3,827

$3,112

$2,487

On December 31, 2010, Chelsea Co. provides a service for its customer Villas Boas Co. in exchange for a promissory note requiring five annual payments of $1,000 each. The payments are to occur on December 31 of each year beginning on December 31, 2011. The note does not specify any interest, and there is no market for the note. Based on the credit worthiness of Villas Boas Co. and the length of the note, it is estimated that Villas Boas Co. would have to pay 10% interest if it borrowed a similar amount from a bank. The carrying value of the note on Chelseas balance sheet on December 31, 2011?

$4,041

$3,737

$3,170

$2,992

On December 31, 2010, Chelsea Co. provides a service for its customer Villas Boas Co. in exchange for a promissory note requiring five annual payments of $1,000 each. The payments are to occur on December 31 of each year beginning on December 31, 2011. The note does not specify any interest, and there is no market for the note. Based on the credit worthiness of Villas Boas Co. and the length of the note, it is estimated that Villas Boas Co. would have to pay 10% interest if it borrowed a similar amount from a bank. The amount of interest revenue recognized by Chelsea for the year ended December 31, 2013 is:

$174

$249

$317

$347