A partial amortization schedule for a 5-year note payable that Mabry Company issued on January 1, Year 1, is shown as follows. Accounting Period Principal Balance January 1 Cash Applied to Applied to Payment Interest Principal Year 1 Year 2 $134,000 $33,561 $10,720 $22,841 Year 3 111,159 86,491 33,561 8,893 24,668 33,561 6,919 26,642 Required a. What rate of interest is Mabry Company paying on the note? b. Using a financial statements model like the one shown, 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. c. If the company earned $90,000 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. d. What is the amount of interest expense on this loan for Year 4?

A partial amortization schedule for a 5-year note payable that Mabry Company issued on January 1, Year 1, is shown as follows. Accounting Period Principal Balance January 1 Cash Applied to Applied to Payment Interest Principal Year 1 Year 2 $134,000 $33,561 $10,720 $22,841 Year 3 111,159 86,491 33,561 8,893 24,668 33,561 6,919 26,642 Required a. What rate of interest is Mabry Company paying on the note? b. Using a financial statements model like the one shown, 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. c. If the company earned $90,000 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. d. What is the amount of interest expense on this loan for Year 4?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Subject : Accounting
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