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On January 1, 20X1, Tractor Sales Co. financed the sale of equipment and recorded a note receivable for the sale. The accountant inappropriately recorded the
On January 1, 20X1, Tractor Sales Co. 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) | 520,000 |
Tax rate | 30% |
Note receivable information:
Term of the note | 4 years |
Coupon rate | 1.5% |
Market rate | 6.2% |
The note is due in equal annual payments of principle and interest.
Incorrect income statement, for the year ended December 31, 20X1
Sales | $2,215,700 |
Interest revenue | 7,800 |
Cost of goods sold | 999,300 |
Expenses | 795,400 |
Pretax income | 428,800 |
Tax expense | 128,640 |
Net income | 300,160 |
What is the correct amount of interest revenue?
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