On January 1, 2012, Sneed Co. borrowed cash from Best Bank by issuing a $100,000 face value, four-year term note that had a 10 percent annual interest rate. The note is to be repaid by making annual cash payments of $31,547 that include both interest and principal on December 31 of each year. Sneed used the proceeds from the loan to purchase land that generated rental revenues of $40,000 cash per year.

Required

a. Prepare an amortization schedule for the four-year period.

b. Organize the information in accounts under an accounting equation.

c. Prepare an income statement, a balance sheet, and a statement of cash flows for each of the four years.

d. Does cash outflow from operating activities remain constant or change each year? Explain.