7-31A (Algo) Accounting for an installment note payable LO 7-5 The following transactions apply to Pecan Co. for Year 1, its first year of operations: 1. Received $35,000 cash in exchange for issuance of common stock. 2. Secured a $114,000 ten-year installment loan from State Bank. The interest rate is 4 percent and annual payments are $14,055. 3. Purchased land for $23,000. 4. Provided services for $90,000. 5. Paid other operating expenses of $36,000. 6. Paid the annual payment on the loan. Required a. Organize the transaction data in accounts under an accounting equation. b. Prepare an income statement and balance sheet for Year 1. c. What is the interest expense for Year 2? Year 3? Complete this question by entering your answers in the tabs below. Req Inc Req A Req B Bal Reg C Stmt Sheet Organize the transaction data in accounts under an accounting equation. (Enter any decreases to account balances with a minus sign, If there is no effect on the Account Titles for Retained Earnings, leave the cell blank. Not all cells will require entry.) PECAN COMPANY Effect of Events on the Accounting Equation Assets Event No. Cash Land Liabilities Note Payable Stockholders' Equity Account Titles for Common Stock Retained Earnings Retained Earnings Year 1 1. 2 + 3 4. 5 Bal 6. Beck Req Inc Stmt> Complete this question by entering your answers in the tabs below. Req A Req B Inc Stmt Req B Bal Sheet Req C Prepare an income statement for Year 1. PECAN COMPANY Income Statement For the Year Ended December 31, Year 1 Non-operating items: Complete this question by entering your answers in the tabs below. Req A Req B Inc Stmt Req B Ball Sheet Req C Prepare a balance sheet for Year 1. Assets PECAN COMPANY Balance Sheet As of Dece+ber 31, Year 1 Total assets Liabilities Total liabilities Stockholders' Equity Total stockholders' equity Total liabilities and stockholders' equity Complete this question by entering your answers in the tabs below. Req A Req B Inc Req B Bal Stmt Req C Sheet What is the interest expense for Year 2? Year 3? (Round your answers to the nearest whole dollar amount.) Interest expense Year 2 Year 3