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 $32,000 cash in exchange for issuance of common stock. 2. Secured a $112,000 ten-year installment loan from State Bank. The interest rate is 6 percent and annual payments are $15,217. 3. Purchased land for $29,000. 4. Provided services for $110,000. 5. Paid other operating expenses of $34,000. 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 B Inc Req A Stmt Req B Bal Sheet Req C Organize the transaction data in accounts under an accounting equation. (Enter any decreases to account balances with a minus sign. If t ie no effect on the Account Titles for Retained Earnings leave the cell hlank Not all cells will require entry Req B Inc Req B Bal Req A Stmt Req C Sheet Organize the transaction data in accounts under an accounting equation. (Enter any decreases to account balanc 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 Liabilities + Event No. Cash Land Note Payable Common Stock Stockholders' Equity Retained Earnings Account Titles for Retained Earnings Year 1 1. 32,000+ 2. 112,000+ 3. (29,000)+ 29,000 32,000+ 112,000+ + + 4. 110,000+ + 5. (34,000)+ 6. (15,217)+ Bal. 175,783 + 29,000 = 112,000+ 32,000+ Req A Req B Inc Stmt > es 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: < Req A Req Req A Req B Inc Stmt Req B Bal Sheet Req C Prepare a balance sheet for Year 1. Assets PECAN COMPANY Balance Sheet As of December 31, Year 1 Total assets Liabilities Total liabilities Stockholders' Equity Total stockholders' equity Total liabilities and stockholders' equity $ 0 0 0 $ 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 A Req B Inc Stmt Req B Bal Sheet Req C What is the interest expense for Year 2? Year 3? (Round your answers to the nearest whe Interest expense Year 2 Year 3