A partial amortization schedule for a five-year note payable that Holly Co. issued on January 1, 2013, is shown here:

Required
a. What rate of interest is Holly Co. paying on the note?
b. Using a financial statements model like the one shown below, record the appropriate amounts for the following two events:
(1) January 1, 2013, issue of the note payable.
(2) December 31, 2014, payment on the note payable.

c. If the company earned $60,000 cash revenue and paid $30,000 in cash expenses in addition to the interest in 2013, what is the amount of each of the following?
(1) Net income for 2013.
(2) Cash flow from operating activities for 2013.
(3) Cash flow from financing activities for 2013.
d. What is the amount of interest expense on this loan for2015?

Transcribed Image Text:

Applied to Principal $8,959 9,497 Accounting Period Cash Principal Balance January Paymen Interest Applied to 2013 2014 $50,000 41,041 $11,549 11,549 $2,500 2,052 Event No. Assets Liab. + Equity Rev. Exp. Net Inc. Cash Flovw 0W