Exercise 10-4A Financial statement effects of an installment note LO 10-1

A partial amortization schedule for a 10-year note payable issued on January 1, Year 1, is shown next:

Accounting Period	Principal Balance January 1			Cash Payment			Applied to Interest			Applied to Principal
Year 1	$	350,000		$	45,327		$	17,500		$	27,827
Year 2		322,173			45,327			16,109			29,218
Year 3		292,955			45,327			14,648			30,679

Required a. Using a financial statements model like the one shown next, 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.

b. If the company earned $92,000 cash revenue and paid $60,000 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.

c. What is the amount of interest expense on this loan for Year 4?

Complete this question by entering your answers in the tabs below. Book Required A Required B1 Required B2 Required B3 Required C Using a financial statements model like the one shown next, record the appropriate amounts for the following two events: (1) January 1, Year 1 is the note payable. (2) December 31, Year 1, payment on the note payable. (In the Statement of Cash Flows column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity and NA to indicate the element is not affected by the event. Enter any decrease account balances with a minus sign.) Show Effect of Transactions on Financial Statements Income Statement Balance Sheet Statement of Cash Flows Equity Revenue Expenses Net Income Event No. Assets Llabilities 1. 2. Required B1 > Required A Required B1 Required B2 Required B3 Required C If the company earned $92,000 cash revenue and paid $60,000 in cash expenses in addition to t the amount of Net income for Year 1? Expenses Total expenses 316 etv AX doo 000 F4 F3 FS FB Required A Required B1 Required B2 Required B3 Required If the company earned $92,000 cash revenue and paid $60,000 in cash expenses in ad the amount of Cash flow from financing activities for Year 1? (Amounts to be deducted Cash flows from financing activities: Net cash flow from financing activities Complete this question by entering your answers in the tabs below. Required A Required B1 Required B2 Required B3 Required C What is the amount of interest expense on this loan for Year 4? (Round your answer to the nearest Interest expense