On January 1, 2016, Brown Co. borrowed cash from First Bank by issuing a $104,000 face value, four-year term note that had an 8 percent annual interest rate. The note is to be repaid by making annual cash payments of $31,400 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 $56,000 cash per year. A.Prepare an amortization schedule for the four-year period. B. Prepare an income statement, balance sheet, and statement of cash flows for each of the four years. (Hint: Record the transactions for each year in T-accounts before preparing the financial statements.
On January 1, 2016, Brown Co. borrowed cash from First Bank by issuing a $104,000 face value, four-year term note that had an 8 percent annual interest rate. The note is to be repaid by making annual cash payments of $31,400 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 $56,000 cash per year. A.Prepare an amortization schedule for the four-year period. B. Prepare an income statement, balance sheet, and statement of cash flows for each of the four years. (Hint: Record the transactions for each year in T-accounts before preparing the financial statements.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2016, Brown Co. borrowed cash from First Bank by issuing a $104,000 face value, four-year term note that had an 8 percent annual interest rate. The note is to
be repaid by making annual cash payments of $31,400 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 $56,000 cash per year.
A.Prepare an amortization schedule for the four-year period.
B. Prepare an income statement, balance sheet, and statement of cash flows for
each of the four years. (Hint: Record the transactions for each year in T-accounts
before preparing the financial statements.
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