On June 1, 2010, Yang Corp

question 99

Multiple Choice

On June 1, 2010, Yang Corp.loaned Gant $300,000 on a 12% note, payable in five annual installments of $60,000 beginning January 2, 2011.In connection with this loan, Gant was required to deposit $3,000 in a zero-interest-bearing escrow account.The amount held in escrow is to be returned to Gant after all principal and interest payments have been made.Interest on the note is payable on the first day of each month beginning July 1, 2010.Gant made timely payments through November 1, 2010.On January 2, 2011, Yang received payment of the first principal installment plus all interest due.At
December 31, 2010, Yang's interest receivable on the loan to Gant should be

• A)$0.
• B)$3,000.
• C)$6,000.
• D)$9,000.

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Definitions:

Duty to Act in Good Faith

A legal obligation requiring parties to act honestly and fairly towards each other within the bounds of a contract.

Commissions

Payments made to employees or agents based on the sales they generate or the deals they complete, often a percentage of the sale price.

Breach

The act of violating a law, duty, or agreement, which can result in legal consequences or termination of the contract.

General Rules of Contract

Fundamental principles that govern the formation, interpretation, and enforcement of contractual agreements.