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Madison Company is a land management company that generates most of its revenues through leasing land. The company experienced the following events during Year 2:
Madison Company is a land management company that generates most of its revenues through leasing land. The company experienced the following events during Year 2: Madison Company issued $830,000 of 10-year, 6 percent bonds on January 1, Year 2. The bonds were issued at face value. Interest is payable in cash on December 31 of each year. Madison Company immediately invested all the proceeds from the bond issue in land. The land was immediately leased for an annual $140,000
viadison ompany is a Iana management company that generates most o Its revenues inrougn Ieasing Iana. I ne company experienced the following events during Year 2: 1. Madison Company issued $830,000 of 10 -year, 6 percent bonds on January 1 , Year 2 . The bonds were issued at face value. Interest is payable in cash on December 31 of each year. 2. Madison Company immediately invested all the proceeds from the bond issue in land. 3. The land was immediately leased for an annual $140,000 of cash revenue. The first year's rent was collected on December 31 , Year 2. 4. Madison Company paid the interest on the bond on December 31, Year 2. Required: Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Note: In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, and NC for net change in cash. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require input leave cells blank if there is no corresponding input neededStep by Step Solution
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