Problem 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 $39,000 cash in exchange for issuance of common stock, 2. Secured a $105,000 ten-year installment loan from State Bank. The interest rate is 5 percent and annual payments are $13,598. 3. Purchased land for $25,000 4. Provided services for $100,000. 5. Paid other operating expenses of $40,000. 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? Req A Req B Inc Reg B Bal Stmt Sheet Reqc 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 = Liabilities + Event Stockholders' Equity Account Titles for Retained No. Note Cash Common Land Retained Payable Stock Earnings Earnings Year 1 1 2 3 4. 5. 6. Bal RA Reg B Inc Stmt > Req A Req B Inc Stmt Req B Bal Sheet ReqC Prepare an income statement for Year 1. PECAN COMPANY Income Statement For the Year Ended December 31, Year 1 Non-operating items: