Frankenstein Enterprises Received Two Notes from Customers for Sales That

Frankenstein Enterprises received two notes from customers for sales that Frankenstein made in 2018. The notes included:
Note A: Dated 5/31/2018, principal of $120,000 and interest due 3/31/2019.
Note B: Dated 7/1/2018, principal of $200,000 and interest at 8% annually, due on 4/1/2019.
Frankenstein had accrued a total of $14,400 interest receivable from these notes in its 12/31/2018 balance sheet.
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Assume Frankenstein views the financing component of these sales to be significant. What amount of interest revenue would Frankenstein earn on these notes during 2019?

A) Above $12,000.
B) Between $7,000 and 10,000.
C) Less than $5,000.
D) None of these answer choices are correct.

Correct Answer:

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