On January 1, 2014, Susan Hong lent $60,104 to Ben Bachu.A zero-interest-bearing note (face amount, $80,000)was exchanged solely for cash; no other rights or privileges were exchanged.The note is to be repaid on December 31, 2016.The market rate of interest for a loan of this type is 10%.To the nearest dollar, and using the effective interest method, how much interest revenue should Ms.Hong recognize in 2014?

Question

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The interest revenue for 2014 is calculated using the effective interest method. The initial carrying amount of the note is $60,104, and the market rate is 10%. Therefore, the interest revenue for 2014 is $60,104 * 10% = $6,010.

On January 1, 2014, Susan Hong Lent $60,104 to Ben