Exercise 10-4A Financial statement effects of an installment note

A partial amortization schedule for a 10-year note payable issued on January 1, 2016, is shown below

Accounting Period Principal Balance January 1 Cash Payment Applied to Interest Applied to Principal

2016 $200,000 $27,174 $12,000 $15,174

2017 184.826 27,174 11,090 16,084

2018 168,742 27,174 10,125 17,049

Required

a. using a financial statements odel like the one shown here, record the apporopriate amounts for the following two events.

(1) January 1, 2016, issue of the note payable.

(2) December 31, 2016, payment on the note payable.

b. If the company earned $62,000 cash revenue and paid $45,000 in cash expenses in addition to the interest in 2016 what is the amount of each of the following?

(1) Net income for 2016.

(2) Cahs flow from operating activities for 2016.

(3) Cahs flow from financing activities of 2016.

Even No. Assets = Liab. + Equity Rev. - exp = Net Inc. Cash Flow

c. What is the amount of interest expense onthe loan for 2016?