Respuesta :
Answer:
From the calculation the interest income in 2018 = 10% of $2,612,000= $261,200
Step-by-step explanation:
The complete question states:
What amount of interest income should Benedict record in 2018 (the second year of the lease period) as a result of the lease?
To answer the question, we look at the given information
The present value given = $3,520,000
The Annual Instalmental payments = $600,000
The Period is 8 years and teh given interest rate at 10%
Based on the information we prepare the following schedule
Year 0 = Instalment + interest = Principal
$600,000 + 0 (interest) = $600,000
Balance = Present value- Principal
Balance = $3520,000 - $600,000 = $2,920,000
Year 1 (2017) = Instalment + interest = Principal
$600,000 + $292,000 (10% of $2,920,000) = $308,000
Balance = Present value- Principal
Balance = $2,920,000- $308,000= $2,612,000
Year 2 (2018) = Instalment + interest = Principal
$600,000 + $261,200(10% of $2,612,000) = $338,000
Balance = Present value- Principal
Balance = $2,612,000- $338,000= $2,350,800
From the calculation the interest income in 2018 = 10% of $2,612,000= $261,200
