8. Wagner Company sold some machinery to Granger Company on January 1, 2007. The cash selling price would have been $568,620. Granger entered into an installment sales contract which required annual payments of $150,000, including interest at 10%, over five years. The first payment was due on December 31, 2007. What amount of interest income should be included in Wagner's 2008 income statement (the second year of the contract)?
The installments paid are to be broken up into interest and principal. Interest is the interest income and the ...
This solution explains how to calculate the amount of interest income on installment sales in the given accounting problem.