E Chaoter 6 Quiz-201 730 Connect x, e Accounting question IC x / I https://new c

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E Chaoter 6 Quiz-201 730 Connect x, e Accounting question IC x / I https://new cor Down nad music, C | Secure connect.htrri ::: Apps Ro k marks m- Ru utemame Rlackboard earn The Ricklist Watch O "atm Ma es Onlir HRU Port -Top 100 M ies of A How to Dr etNa e Tool TH2 w r Rase l my it k Chap 7 Probs 26 & 30 G Help Save & Exit Submit Check my work 4 Required information Part 3 of 4 The following information applies to the questions displayed belowj On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $70,500 face value, four-year term note that had an 5 percent annual interest rate. The note is to be repaid by making annual cash payments of $19,882 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 $35,250 cash per year. 10 points cBonk c. Prepare an income statement, a balance sheet, and a statement of cash flows for each of the four years. References Complete this question by entering your answers in the tabs below Req C Inc Strnit Rege Bal Sheet Prepare the income statement for each of the four years. (Round your answers to the nearest whole dollar amount.) BROWN co. Income Statement the Year Ended December Hill 641 PM O Type here to search ^d, ING 11/16/2017

Explanation / Answer

year prin.bal. on jan1 B cash pay dec31 C applied to interset I=B*5% applied to principal B=C-I prin.bal.end of period B-P 2018 $70,500 19882 $3,525 $16,357 $54,143 2019 $54,143 19882 $2,707 $17,175 $36,968 2020 $36,968 19882 $1,848 $18,034 $18,935 2021 $18,935 19882 $947 $18,934 $0 Income Statement 2018 2019 2020 2021 Rental revenue $35,250 $35,250 $35,250 $35,250 Less: Interest expenses $3,525 $2,707 $1,848 $947 Net Income $31,725 $32,543 $33,402 $34,303 Balance Sheet 2016 2017 2018 2019 Assets Cash (35250-19882) $15,368 $30,736 $46,104 $61,473 Land 70500 70500 70500 70500 Total Assets $85,868 $101,236 $116,604 $131,973 Liabilities & Stock holder equity Notes Payable $54,143 $36,968 $18,935 $0 Total Liabilities $54,143 $36,968 $18,935 $0 Stockholder Equity $31,725 $64,268 $97,669 $131,973 Liabilities & Stock holder equity $85,868 $101,236 $116,604 $131,973 (note cash and stockholder is incresing cumulatively adding the previous year balances) Statement of Cash flows Cash flows from operating activities Rent revenue $35,250 $35,250 $35,250 $35,250 Interest paid ($3,525) ($2,707) ($1,848) ($947) Net Cash from Operating Activities $31,725 $32,543 $33,402 $34,303 Cash flows from Investing activities Purchase of lands ($70,500) $0 $0 $0 Net cash used in Investing activities ($70,500) Cash flows from financing activities Borrowing of Notes Payable $70,500 0 0 0 Repayment of Notes payable ($16,357) ($17,175) ($18,034) ($18,934) Net cash from financing activities $54,143 ($17,175) ($18,034) ($18,934) Net Increase in cash and cash equivalents $15,368 $15,368 $15,368 $15,369 Cash and cash equivalents at beginning of period 0 $15,368 $30,736 $46,104 Ending Balance $15,368 $30,736 $46,104 $61,473

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