16.12 A partial amortization schedule for a 5-year note payable that Mabry Company issued on January 1, Year 1, is shown as follows.

Required

1. What rate of interest is Mabry Company paying on the note?
2. Using a financial statements model like the one shown, record the appropriate amounts for the following two events:
   1. (1) January 1, Year 1, issue of the note payable.
   2. (2) December 31, Year 1, payment on the note payable.

1. If the company earned $82,500 cash revenue and paid $49,500 in cash expenses in addition to the interest in Year 1, what is the amount of each of the following?
   1. (1) Net income for Year 1.
   2. (2) Cash flow from operating activities for Year 1.
   3. (3) Cash flow from financing activities for Year 1.
2. What is the amount of interest expense on this loan for Year 4?

Accounting Period Year 1 Year 2 Year 3 Principal Balance January 1 $113,000 94,856 74,716 Cash Payment $30,574 30,574 30,574 Applied to Interest $12,430 10,434 8,219 Applied to Principal $18, 144 20, 140 22,355 MABRY COMPANY Event No. Horizontal Statements Model Balance Sheet Income Statement Stockholder's Liabilities Revenue Expense = Net Income Equity + Statement of Cash Flow Assets + 1. 2