Helen Parish started a design company on January 1, Year 1. On April 1, Year 1, Parish borrowed cash from a local bank by issuing a one-year $120,000 face value note with annual interest based on an 8 percent discount. During Year 1, Parish provided services for $72,000 cash.

Required Answer the following questions. (Hint: Record the events in T-accounts prior to answering the questions.)

1. What is the amount of total liabilities on the December 31, Year 1, balance sheet?
2. What is the amount of net income on the Year 1 income statement?
3. What is the amount of cash flow from operating activities on the Year 1 statement of cash flows?
4. Provide the general journal entries necessary to record issuing the note on April 1, Year 1; recognizing accrued interest on December 31, Year 1; and repaying the loan on March 31, Year 2.