A partial amortization schedule for a ten-year note payable that Muro Co. issued on January 1, 2012, is shown here:

Required
a. What rate of interest is Muro Co. paying on the note?
b. Using a financial statements model like the one shown below, record the appropriate amounts for the following two events.
(1) January 1, 2012, issue of the note payable.
(2) December 31, 2012, payment on the note payable.

c. If the company earned $75,000 cash revenue and paid $35,000 in cash expenses in addition to the interest in 2012, what is the amount of each of the following?
(1) Net income for 2012.
(2) Cash flow from operating activities for 2012.
(3) Cash flow from financing activities for 2012.
d. What is the amount of interest expense on this loan for2014?

Transcribed Image Text:

Accounting Period 2012 2013 Principal Cash Applied to Applied to Balance Jany1 Payment Interest Principal $12,549 13,804 200,000 187,451 S32,549 32,549 $20,000 18,745 Event No. Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash Flow