In 2016, Chaya Corporation, an accrual basis, calendar year taxpayer, provided services to clients and earned $25,000.

Question:

In 2016, Chaya Corporation, an accrual basis, calendar year taxpayer, provided services to clients and earned $25,000. The clients signed notes receivable to Chaya that have a fair market value of $22,000 at year-end. In addition, Chaya sold a 36-month service contract on June 1, 2016, and received payment in full of $12,000. How much income does Chaya report from these transactions in 2016?