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[The following information applies to the questions displayed below.] On January 1, Year 1, Brown Company borrowed cash from First Bank by issuing a $107,000 face-value, four-year term note that had an 6 percent annual interest rate. The note is to be repaid by making annual cash payments of $30,879 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 $59,000 cash per year.

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

BROWN COMPANY
Amortization Schedule
$107,000, 4-Year Term Note, 6% Interest Rate
Year	Principal Balance on January 1	Cash Payment December 31	Applied to Interest	Applied to Principal	Principal Balance End of Period
Year 1	$107,000	$30,879	$6,420	$24,459	$82,541
Year 2	82,541	30,879	4,952	25,927	56,614
Year 3	56,614	30,879	3,397	27,482	29,132
Year 4	29,132	30,879	1,747	29,132	0