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What happens when a company is operating in an inflationary environment? ...

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Accounting

What happens when a company is operating in an inflationary environment?

The company's net income will be higher if it uses LIFO than if it uses FIFO.

Rosewood Company made a loan of $9200 to one of the company's employees on April 1, Year 1. The one-year note carried a 6% rate of interest. Rosewood Company's fiscal year-end is December 31. What is the amount of interest revenue that Rosewood would report in Year 1 and Year 2, respectively?

$0 in Year 1 and $552 in Year 2

$552 in Year 1 and $0 in Year 2

$414 in Year 1 and $138 in Year 2

$138 in Year 1 and $414 in Year 2

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