On January 1, 20X1, Tractor Sales Co. financed the sale of equipment and recorded a...
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Accounting
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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