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19 October, 00:21

Wally used the funds as a down payment on a speedboat and repaid the $20,000 loan (including $200 of interest) at year-end. does this loan result in any income to either party, and if so, how much?

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  1. 19 October, 01:16
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    Determination of income on Loan transaction:

    It is given that Wally used the funds as a down payment on a speedboat and repaid the $20,000 loan (including $200 of interest) at year-end.

    It means the speedboat seller has earned the interest of $200 on the amount of loan which shall be treated as interest income.

    Hence the loan results in interest income to the other party for $200.
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