Exercise 7-10A (Algo) Amortization of a long-term loan LO 7-5 A partial amortization schedule for a 5-year note payable that Mabry Company issued on January 1, Year 1, is shown as follows. Accounting Period Year 1 Year 2 Year 3 Principal Balance January 1 $137,000 114,108 89,156 Cash Payment $35, 222 35,222 35,222 Applied to Interest $12,330 10,270 8,024 Applied to Principal $22,892 24,952 27,198 Required a. What rate of interest is Mabry Company paying on the note? b. Using a financial statements model like the one shown, record the appropriate amounts for the following two events: (1) January 1, Year 1, issue of the note payable. (2) December 31, Year 1, payment on the note payable. c. If the company earned $97,700 cash revenue and paid $58,620 in cash expenses in addition to the interest in Year 1, what is the amount of each of the following? (1) Net income for Year 1. (2) Cash flow from operating activities for Year 1. (3) Cash flow from financing activities for Year 1. d. What is the amount of interest expense on this loan for Year 4? MABRY COMPANY Horizontal Statements Model Balance Sheet Income Statement Stockholder's Liabilities Revenue Expense Net Income Equity Event Statement of Cash Flow No. Assets 1. 2