The following transactions apply to Pecan Co. for 2018, its first year of operations: 1. Received $100,000 cash in exchange for issuance of common stock. 2. Secured a $300,000 five-year installment loan from State Bank. The interest rate is 5 percent and annual payments are $69,292. 3. Purchased land for $100,000 4. Provided services for $260,000. 5. Paid other operating

Chapter 7, Exercises #31

The following transactions apply to Pecan Co. for 2018, its first year of operations:

1. Received $100,000 cash in exchange for issuance of common stock.

2. Secured a $300,000 five-year installment loan from State Bank. The interest rate is 5 percent and annual payments are $69,292.

3. Purchased land for $100,000

4. Provided services for $260,000.

5. Paid other operating expenses of $150,000.

6. Paid the annual payment on the loan. Round answers to nearest whole dollar.

Required

a. Organize the transaction data in accounts under an accounting equation.

b. Prepare an income statement and balance sheet for 2018.

c. What is the interest expense for 2019? 2020?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...