The following transactions apply to Pecan Co. for Year 1, its first year of operations: 1. Received $40,000 cash in exchange for issuance of common stock. 2. Secured a $111,000 ten-year installment loan from State Bank. The interest rate is 6 percent and annual payments are $15,081. 3. Purchased land for $25,000. 4. Provided services for $80,000. 5. Paid other operating expenses of $49,000. 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?
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- The following transactions apply to Walnut Enterprises for Year 1, its first year of operations: Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, Year 1. Received $130,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Paid $62,000 cash for other operating expenses during the year. Paid the sales tax due on $110,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2. Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2: Paid the balance of the sales tax due for Year 1. Received $201,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Repaid the principal of the note and applicable interest on April 1, Year 2. Paid $102,500 of other…The following transactions apply to Walnut Enterprises for Year 1, its first year of operations: Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, Year 1. Received $130,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Paid $62,000 cash for other operating expenses during the year. Paid the sales tax due on $110,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2. Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2: Paid the balance of the sales tax due for Year 1. Received $201,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Repaid the principal of the note and applicable interest on April 1, Year 2. Paid $102,500 of other…The following transactions apply to Walnut Enterprises for Year 1, its first year of operations: Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, Year 1. Received $130,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Paid $62,000 cash for other operating expenses during the year. Paid the sales tax due on $110,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2. Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2: Paid the balance of the sales tax due for Year 1. Received $201,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Repaid the principal of the note and applicable interest on April 1, Year 2. Paid $102,500 of other…
- The following transactions apply to Walnut Enterprises for Year 1, its first year of operations:Received $43,000 cash from the issue of a short-term note with a 5 percent interest rate and a one-year maturity. The note was made on April 1, Year 1.Received $117,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent.Paid $73,000 cash for other operating expenses during the year.Paid the sales tax due on $97,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2.Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2:Paid the balance of the sales tax due for Year 1.Received $142,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent.Repaid the principal of the note and applicable interest on April 1, Year 2.Paid $86,000 of other operating expenses…The following transactions apply to Walnut Enterprises for Year 1, its first year of operations:Received $43,000 cash from the issue of a short-term note with a 5 percent interest rate and a one-year maturity. The note was made on April 1, Year 1.Received $117,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent.Paid $73,000 cash for other operating expenses during the year.Paid the sales tax due on $97,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2.Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2:Paid the balance of the sales tax due for Year 1.Received $142,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent.Repaid the principal of the note and applicable interest on April 1, Year 2.Paid $86,000 of other operating expenses…The following transactions apply to Walnut Enterprises for Year 1, its first year of operations:Received $43,000 cash from the issue of a short-term note with a 5 percent interest rate and a one-year maturity. The note was made on April 1, Year 1.Received $117,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent.Paid $73,000 cash for other operating expenses during the year.Paid the sales tax due on $97,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2.Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2:Paid the balance of the sales tax due for Year 1.Received $142,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent.Repaid the principal of the note and applicable interest on April 1, Year 2.Paid $86,000 of other operating expenses…
- The following transactions apply to Walnut Enterprises for Year 1, its first year of operations:Received $43,000 cash from the issue of a short-term note with a 5 percent interest rate and a one-year maturity. The note was made on April 1, Year 1.Received $117,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent.Paid $73,000 cash for other operating expenses during the year.Paid the sales tax due on $97,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2.Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2:Paid the balance of the sales tax due for Year 1.Received $142,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent.Repaid the principal of the note and applicable interest on April 1, Year 2.Paid $86,000 of other operating expenses…The following transactions apply to Walnut Enterprises for Year 1, its first year of operations: Received $43,000 cash from the issue of a short-term note with a 5 percent interest rate and a one-year maturity. The note was made on April 1, Year 1. Received $117,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent. Paid $73,000 cash for other operating expenses during the year. Paid the sales tax due on $97,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2. Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2: Paid the balance of the sales tax due for Year 1. Received $142,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent. Repaid the principal of the note and applicable interest on April 1, Year 2. Paid $86,000 of other operating…The following transactions apply to Walnut Enterprises for Year 1, its first year of operations:Received $43,000 cash from the issue of a short-term note with a 5 percent interest rate and a one-year maturity. The note was made on April 1, Year 1.Received $117,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent.Paid $73,000 cash for other operating expenses during the year.Paid the sales tax due on $97,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2.Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2:Paid the balance of the sales tax due for Year 1.Received $142,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent.Repaid the principal of the note and applicable interest on April 1, Year 2.Paid $86,000 of other operating expenses…
- On January 1, Year 1, Brown Co. borrowed cash from First Bank by issuing a $68,500 face value, four-year term note that had an 9 percent annual interest rate. The note is to be repaid by making annual cash payments of $21,144 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 $37,675 cash per year. statement of cash flowLeach Company borrowed $95,000 cash by issuing a note payable on June 1, Year 1. The note had an 6 percent annual rate of interest and a one-year term to maturity. Required: a. What amount of interest expense will Leach recognize for the year ending December 31, Year 1? b. Record the issue of notes payable and recognition of interest on December 31, Year 1, in the accounting equation for Year 1. c. What amount of cash will Leach pay for interest expense in Year 1? d. What is the amount of interest payable as of December 31, Year 1? e. What amount of cash will Leach pay for interest expense in Year 2? f. What amount of interest expense will Leach recognize in Year 2? g. What is the amount of interest payable as of December 31, Year 2? -On September 1. Year 1, Western Company loaned $36,600 cash to Eastern Company. The one year note carried a 6% rate of interest. The amount of interest revenue on the income statement and the amount of cash flow from operating activities shown on Western's Year 2 financial statements would be Multiple Choice $732 interest revenue and $2196 cash inflow from operating activmes $1.464 imerest revenue and $2,196 cash inflow from operating activities