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Exercise 10-4A Financial statement effects of an installment note LO 10-1 A partial amortization schedule for a 10-year note payable issued on January 1, Year 1, is shown next: Accounting Period Year 1 Year 2 Year 3 Principal Balance January 1 $290,000 266,944 242,735 Cash Payment $37,556 37,556 37,556 Applied to Interest $14,500 13,347 12,137 Applied to Principal $23,056 24,209 25,419 Required a. Using a financial statements model like the one shown next, 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. b. If the company earned $80,000 cash revenue and paid $54,000 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. c. What is the amount of interest expense on this loan for Year 4? Required A Required B1 Required B2 Required B3 Required C Using a financial statements model like the one shown next, record the appropriate amounts for the following two events: (1) January 1, Year 1 the note payable. (2) December 31, Year 1, payment on the note payable. (In the Statement of Cash Flows column, use the initials OA to desig operating activity, IA for investing activity, FA for financing activity and NA to indicate the element is not affected by the event. Enter any decre account balances with a minus sign.) Shc Effect of Transactions on Financial Statements Balance Sheet Income Statement Event No. Assets Liabilities + Equity Revenue Expenses = Net Income Statement of Cash Flows 1. 2. IA FA Required A Required B1 Required B2 Required B3 Required C If the company earned $80,000 cash revenue and paid $54,000 in cash expenses in addition to the interest in Year 1, what is the amount of Net income for Year 1? Revenue Expenses 0 Total expenses Net income $ 0 Required A Required B1 Required B2 Required B3 Required c If the company earned $80,000 cash revenue and paid $54,000 in cash expenses in addition to the interest in Y the amount of Net income for Year 1? Revenue Expenses Bonds payable 0 Cash $ 0 Discount on bonds payable Gain on bond redemption Interest expense Required A. Required B1 Required B2 Required B3 Required c If the company earned $80,000 cash revenue and paid $54,000 in cash expenses in addition to the interest in Year 1, what is the amount of Cash flow from operating activities for Year 1? (Amounts to be deducted should be indicated with minus sign.) Cash flows from operating activities: Net cash flow from operating activities $ 0 Required A. Required B1 Required B2 Required B3 Required C If the company earned $80,000 cash revenue and paid $54,000 in cash expenses in addition to the amount of Cash flow from operating activities for Year 1? (Amounts to be deducted should Cash flows from operating activities: Inflow from customers Inflow from note issue $ 0 Outflow for expenses K Required B1 Required B3 > Outflow of interest Outflow to repay note Required A Required B1 Required B2 Required B3 Required C If the company earned $80,000 cash revenue and paid $54,000 in cash expenses in addition to the interest in Year 1, what is the amount of Cash flow from financing activities for Year 1? (Amounts to be deducted should be indicated with minus sign.) Cash flows from financing activities: Net cash flow from financing activities $ 0 Required A Required B1 Required B2 Required B3 Required C What is the amount of interest expense on this loan for Year 4? (Round your answer to the nearest dollar amount.) Interest expense
