Lino Corporation's liability account balances at December 31, 1993, included the following: Note payable to bank $800,000 Liability under capital lease 280,000 Deferred income taxes 100,000 Additional information: The note payable, dated October 1, 1993, bears interest at an annual rate of 10% payable semiannually on April 1 and October I. Principal payments are due annually on October l in four equal installments. The capital lease is for a 10-year period beginning December 31, 1988 Equal annual payments of S100.000 are due on December 31 of each year. The 16% interest rate implicit in the lease is known by Lino. At December 31, 1993, the present value of the four remaining lease payments discounted at 16% was $280,000 Deferred income taxes are provided in recognition of timing differences between financial statement and income tax reporting of depreciation. For the year ended December 31, 1994, depreciation per tax return exceeded book depreciation by $50,000. Lino's income tax rate for 1994 was 30%. On July 1, 1994, Lino issued $1,000,000 face amount of 10-year, 10% bonds for $750,000, to yield 15%. Interest is payable annually on July 1. Bond discount is amortized by the interest method. All required principal and interest payments were made on schedule in 1994. Required: a. Prepare the long-term liabilities section of Lino's balance sheet at December 31, 1994 b. Prepare a schedule showing interest expense that should appear in Lino's income statement for the year ended December 31, 1994