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What is the correct interest revenue

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Question - A company financed the sale of equipment and recorded a note receivable for the sale. The accountant inappropriately recorded the sale at the coupon rate instead of market rate and fair value.

Cash received $80,000

Notes receivable 339,000

Sales price $419,000

Tax rate 30%

Estimated tax payment $23,000

Note information:

Term of the note 4 years

Coupon rate 1.5%

Market rate 7.7%

The note is due in equal annual payments of principle and interest.

Incorrect income statement, for the year ended December 31

Sales $739,000

Expenses 591,000

Interest revenue 5,085

Pretax income 153,085

Tax expense 45,926

Net income 107,159

Required - What is the correct interest revenue for 20X1?

Reference no: EM132879888

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