On January 1, Jewel Company buys $200,000 of Marcelo Corp. 12%, 36-month notes. Interest is paid on the last day of each month. The notes are classified as available-for-sale securities. This is the company's first and only investment in available-for-sale securities. On December 31, the notes have a fair value of $204,000. The impact on Jewel's net income as a result of its investment in Marcelo Corp. was a(n):
A. Decrease to income of $24,000.
B. Decrease to income of $28,000.
C. Increase to income of $2,000.
D. Increase to income of $28,000.
E. Increase to income of $24,000.
Answer: E
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