A partial amortization schedule for a five-year note payable that Chacon Co. issued on January 1, 2008, is shown here:

Required:

a. What rate of interest is Chacon 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 1,2008, issue of the note payable.
(2) December 31, 2009, payment on the note payable.

c. If the company earned \($90,000\) cash revenue and paid \($50,000\) in cash expenses in addition to the interest in 2008, what is the amount of each of the following? (Disregard income taxes.)
(1) Net income for 2008.
(2) Cash flow from operating activities for 2008.
(3) Cash flow from financing activities for 2008.

d. What is the amount of interest expense on this loan for 2010?

Transcribed Image Text:

Accounting Period Principal Balance January 1 Cash Payment Applied to Applied to Interest Principal 2008 2009 $120,000 $30,851 $10,800 $20,051 99,949 30,851 8,995 21,856