On January 1, Year 1, Brown Co. borrowed cash from First Bank by issuing a $43,500 face value, four-year term note that had an 6 percent annual interest rate. The note is to be repaid by making annual cash payments of $12,554 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $21,750 cash per year.
On January 1, Year 1, Brown Co. borrowed cash from First Bank by issuing a $43,500 face value, four-year term note that had an 6 percent annual interest rate. The note is to be repaid by making annual cash payments of $12,554 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $21,750 cash per year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![[The following information applies to the questions displayed below.]
On January 1, Year 1, Brown Co. borrowed cash from First Bank by issuing a $43,500 face value, four-year term note that
had an 6 percent annual interest rate. The note is to be repaid by making annual cash payments of $12,554 that include
both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that
generated rental revenues of $21,750 cash per year.
c. Prepare an income statement, a balance sheet, and a statement of cash flows for each of the four years.
Complete this question by entering your answers in the tabs below.
Req C Inc
Stmt
Req C Bal Req C Stmt of
Sheet
Cash Flows
Prepare the income statement for each of the four years. (Round your answers to the nearest whole dollar amount.)
BROWN CO.
Income Statement
For the Year Ended December 31
Year 1
Year 2
Rent revenue
Interest expense
Net income
$ 21,750 S
2,610
$ 19,140 $
Year 3
21,750 $ 21,750 $
1,381
2,013
19,737 $
Year 4
21,750
712
20,369 $ 21,038](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fca2f1de9-4c84-4f26-8bb3-5ee4dd3a748a%2F6990be16-f34e-4ba9-bd04-56ef9ddd4a55%2F2ympm4c_processed.jpeg&w=3840&q=75)
Transcribed Image Text:[The following information applies to the questions displayed below.]
On January 1, Year 1, Brown Co. borrowed cash from First Bank by issuing a $43,500 face value, four-year term note that
had an 6 percent annual interest rate. The note is to be repaid by making annual cash payments of $12,554 that include
both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that
generated rental revenues of $21,750 cash per year.
c. Prepare an income statement, a balance sheet, and a statement of cash flows for each of the four years.
Complete this question by entering your answers in the tabs below.
Req C Inc
Stmt
Req C Bal Req C Stmt of
Sheet
Cash Flows
Prepare the income statement for each of the four years. (Round your answers to the nearest whole dollar amount.)
BROWN CO.
Income Statement
For the Year Ended December 31
Year 1
Year 2
Rent revenue
Interest expense
Net income
$ 21,750 S
2,610
$ 19,140 $
Year 3
21,750 $ 21,750 $
1,381
2,013
19,737 $
Year 4
21,750
712
20,369 $ 21,038
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