On January 1, 2019, Onslow Company borrowed $360,000 from a major customer evidenced by a non-interest-bearing note

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On January 1, 2019, Onslow Company borrowed $360,000 from a major customer evidenced by a non-interest-bearing note due in 3 years. Onslow agreed to supply the customer’s inventory needs for the loan period at lower than market price. At the 12% imputed interest rate for this type of loan, the present value of the note is $255,000 at January 1, 2019. What amount of interest expense should be included in Onslow’s 2019
income statement?
a. $43,200
b. $35,000
c. $30,600
d. $0

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