Brief Exercise 5.4 (Algo) Accounting for notes receivable LO 5.4 Mark's on the Park (MOP) is a highly successful restaurant known for their weekend brunch. Given the success of the restaurant, one of Mark's friends, Mr. Lowe, asked for some financial help to open a similar restaurant in a nearby town. The following events relate to the loan from MOP to Mr. Lowe: 1. On March 1, Year 1, MOP loaned Mr. Lowe $60,600 for one year at 5 percent interest. 2. On December 31, Year 1, MOP recognized accrued interest on the loan. 3. On March 1, Year 2, MOP recognized accrued interest. 4. On March 1, Year 2, MOP recognized the collection of the note including all interest. Required: Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is needed. Exercise 5-11A (Algo) Accounting for notes receivable LO 5-4 Rainey Enterprises loaned $35,000 to Small Company on June 1, Year 1, for one year at 7 percent interest. Required Show the effects of the following transactions in a horizontal statements model. In the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is needed. (1) The loan to Small Company (2) The adjusting entry at December 31 , Year 1. (3) The adjusting entry and collection of the note on June 1, Year 2