On January 31, Year 6, Roy Sold Investment Property He

Multiple Choice

On January 31, year 6, Roy sold investment property he purchased five years ago for $10,000 to Hal for $18,000 Hal made a $8,000 down payment on the date of sale, a $6,000 payment on January 31 of year 2 and the balance on January 31, year 3.In addition, the Hal paid 6 percent interest on the unpaid balance.How much income should Roy recognize in years 1, 2, and 3 assuming he used the installment method?

A) $8,000 in year 1
B) $7,778 in year 2
C) $4,444 in year 1
D) $4,000 in year 2