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What is the appropriate interest entry on December

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Question - On January 1, 2018, Calloway Company leased a machine to Zone Corporation. The lease qualifies as a sales-type lease. Calloway paid $200,000 for the machine and is leasing it to Zone for $31,000 per year, an amount that will return 8% to Calloway. The present value of the lease payments is $200,000. The lease payments are due each January 1, beginning in 2018. What is the appropriate interest entry on December 31, 2018?

a. Cash13,520 Interest receivable 13,520

b. Interest receivable13,520 Interest revenue 13,520

c. Cash16,000 Interest revenue 16,000

d. Interest receivable16,000 Interest

Reference no: EM132604482

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