Polledo Company issued \(\$ 350,000\) of 20-year, 6 percent bonds on January 1, 2011. The bonds were issued at face value. Interest is payable in cash on December 31 of each year. Polledo immediately invested the proceeds from the bond issue in land. The land was leased for an annual \(\$ 56,000\) of cash revenue, which was collected on December 31 of each year, beginning December 31, 2011.

Required

a. Prepare the journal entries for these events, and post them to T-accounts for 2011 and 2012.

b. Prepare the income statement, balance sheet, and statement of cash flows for 2011 and 2012.