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On January 1, 20X1, a company financed the sale of equipment and recorded a note receivable for the sale. The accountant inappropriately recorded the sale
On January 1, 20X1, a company financed the sale of equipment and recorded a note receivable for the sale. The accountant inappropriately recorded the sale at the face value and coupon rate in the below income statement.
Notes receivable (Face value) | 430,000 |
Tax rate | 30% |
Note receivable information:
Term of the note | 8 years |
Coupon rate | 1.2% |
Market rate | 5.6% |
The note is due in equal annual payments of principle and interest.
Incorrect income statement, for the year ended December 31, 20X1
Sales | $1,832,200 |
Interest revenue | 5,160 |
Cost of goods sold | 826,300 |
Expenses | 657,800 |
Pretax income | 353,260 |
Tax expense | 105,978 |
Net income | $247,282 |
What is correct amount of sales that should be reported on the income statement?
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