Swan Finance Company,an Accrual Method Taxpayer,requires All of Its Customers

Swan Finance Company,an accrual method taxpayer,requires all of its customers to carry credit life insurance.If a customer dies,the company receives from the insurance company the balance due on the customer's loan.Ali,a customer,died owing the company $1,000.The balance due included $100 accrued interest that Swan had included in income.When Swan collects $1,000 from the insurance company,Swan:

A) Does not recognize income because life insurance proceeds are tax-exempt.
B) Must recognize $900 income from the life insurance proceeds.
C) Must recognize $1,000 income from the life insurance proceeds.
D) Does not recognize income from the life insurance because the entire amount is a recovery of capital.
E) None of the above.