On January 1, Year 1, Brown Co. borrowed cash from First Bank by issuing a $116,000 face-value, four-year term note that had an 8 percent annual interest rate. The note is to be repaid by making annual cash payments of $35,023 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $68,000 cash per year.

b. Prepare an income statement, balance sheet, and statement of cash flows for each of the four years. (Hint: Record the transactions for each year in T-accounts before preparing the financial statements.)