Your audit client asked you to assess the collectability of the receivables carried in the books of AL Corp. The trial balance prepared at December 31, 20xx showed a balance of 4,000,000 for Notes Receivables shown as follows:

NOTES RECEIVABLE FROM COMPANY X 3,000,000

NOTES RECEIVABLE FROM COMPANY Z 1,0000,000

TOTAL 4,000,000

You discovered the following:

-The notes receivable from Comp X is a 3 year non-interest bearing note, with face value of 3,000,000. The note was received in exchange for a piece of land sold by AL on May 1, 20xx. The land was carried in the books at the date of sale at 2,600,000. The difference between the face amount of the note and the carrying value of the land was credited to gain on sale of land. The market interest rate for this type is 10%.

-The notes receivable from Comp Z bears interest at 10%. The note was received from sale of goods in the normal course of business. The note is dated October 1, 20xx and matures on March 31, 20x1

AL did not record any interest revenue during 20xx on any of the notes mentioned above.

REQUIREMENT:

Interest income to be reported in the income statement for December 20xx.