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2 December, 04:05

On January 2, 2018, Jensen Corporation sells equipment it manufactured to Lewisburg Fabricators in exchange for an $80,000 note due in five years. The note bears no stated interest rate, but requires the entire $80,000 to be repaid at the end of five years. Jensen recently sold the same equipment to another company for $54,447. When Lewisburg Fabricators sought bank financing for this purchase the company was offered the funds at 8%, but decided to let Jensen hold the note. What amount will Jensen recognize as interest income during 2019

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  1. 2 December, 04:45
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    Interest = Carrying value * Interest rate = $54,447*8% = $4356

    Amountof interest to be recognized is $4356
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