The following transactions apply to Pecan Co. for Year 1, its first year of operations: 1. Received $33,000 cash in exchange for issuance of common stock. 2. Secured a $115,000 ten-year installment loan from State Bank. The interest rate is 6 percent and annual payments are $15,625. 3. Purchased land for $23,000. 4. Provided services for $90,000. 5. Paid other operating expenses of $45,000. 6. Paid the annual payment on the loan. Required a. Organize the transaction data in accounts under an accounting equation. b. Prepare an income statement and balance sheet for Year 1. c. What is the interest expense for Year 2? Year 3? Organize the transaction data in accounts under an accounting equation. (Enter any decreases to account balances with a minus sign. If there is no effect on the Account Titles for Retained Earnings, leave the cell blank. Not all cells will require entry.) Assets PECAN COMPANY Effect of Events on the Accounting Equation = Liabilities + Stockholders' Equity Note Common Retained Payable Stock Earnings Event No. Account Titles for Retained Earnings Cash + Land Year 1 1. ++ ++ 2. + 3. + + 4. + + + 5. ++ 6. + + + + + + Bal. 0 + 0 = 0 Prepare an income statement for Year 1. PECAN COMPANY Income Statement For the Year Ended December 31, Year 1 Non-operating items: PECAN COMPANY Balance Sheet As of December 31, Year 1 Assets $ 0 Total assets Liabilities 0 Total liabilities Stockholders' Equity 0 Total stockholders' equity Total liabilities and stockholders' equity $ Year 2 Year 3 Interest expense