Question: Same information as the previous question. A company financed the sale of equipment and recorded a note receivable for the sale. The accountant inappropriately recorded

Same information as the previous 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 receivable339,000

Sales price$419,000

Tax rate30%

Estimated tax payment $23,000

Note information:

Term of the note 4 years

Coupon rate1.5%

Market rate7.7%

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

Incorrect income statement, for the year ended December 31

Sales$739,000

Expenses591,000

Interest revenue5,085

Pretax income153,085

Tax expense45,926

Net income107,159

What is the correctinterest revenuefor 20X1?

Note: Interest revenue in year 1 iscomputed as the fair value of the note times the market rate of interest.

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