A partial amortization schedule for a 10-year note payable issued on January 1, 2016, is shown below:

Required
a. Using a financial statements model like the one shown here, record the appropriate amounts for the following two events:
(1) January 1, 2016, issue of the note payable.
(2) December 31, 2016, payment on the note payable.

b. If the company earned $62,000 cash revenue and paid $45,000 in cash expenses in addition to the interest in 2016, what is the amount of each of the following?
(1) Net income for 2016.
(2) Cash flow from operating activities for 2016.
(3) Cash flow from financing activities for 2016.
c. What is the amount of interest expense on this loan for 2019?

Transcribed Image Text:

Accounting Period Principal Balance January 1 Cash Payment Applied to Interest Applied to Principal 2016 2017 2018 $200,000 184,826 168,742 $27,174 27,174 27,174 $12,000 11,090 10,125 $15,174 16,084 17,049 Event No. Assets Liab. Equity Rev. Exp. = Net Inc. Cash Flow