In: Accounting
On January 1, Year 1, Brown Co. borrowed cash from First Bank by issuing a $64,500 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 $19,909 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 $34,185 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.
Prepare the income statement for each of the four years.
Particulars | Year 1 | Year 2 | Year 3 | Year 4 |
Rental Income (A) | 34,185 | 34,185 | 34,185 | 34,185 |
Interest Expense (B) | 5,805 | 4,536 | 3,152 | 1,643 |
Profit (A-B) | 28,380 | 29,649 | 31,033 | 32,542 |
Particulars | Year 1 | Year 2 | Year 3 | Year 4 |
Reserve & Surplus | 28,380 | 58,029 | 89,062 | 1,21,604 |
9% Long term Note | 35,023 | 18,266 | 0 | 0 |
Installment due in 1 Year | 15,373 | 16,757 | 18,266 | 0 |
Total | 78,776 | 93,052 | 1,07,328 | 1,21,604 |
Land | 64,500 | 64,500 | 64,500 | 64,500 |
Bank Balance | 14,276 | 28,552 | 42,828 | 57,104 |
Total | 78,776 | 93,052 | 1,07,328 | 1,21,604 |
Particulars | Year 1 | Year 2 | Year 3 | Year 4 |
1. Cash Flow from Operating Activities | ||||
Net Profit for The Year | 28,380 | 29,649 | 31,033 | 32,542 |
Finance Cost for Year | 5,805 | 4,536 | 3,152 | 1,643 |
Net Cash flow from Operating Activities (A) | 34,185 | 34,185 | 34,185 | 34,185 |
2. Cash Flow from Investing Activities | ||||
Purchase of Land | -64,500 | 0 | 0 | 0 |
Net Cash flow from Investing Activities (B) | -64,500 | 0 | 0 | 0 |
3. Cash Flow from Financing Activities | ||||
Proceeds from issuance of 9% Long term Note | 64,500 | 0 | 0 | 0 |
Finance Cost for Year | -5,805 | -4,536 | -3,152 | -1,643 |
Repayment of Long term Note | -14,104 | -15,373 | 16,757 | -18,266 |
Net Cash flow from Financing Activities (C) | 44,591 | -19,909 | -19,909 | -19,909 |
Net Cash Flow for the Year (A+B+C) | 14,276 | 14,276 | 14,276 | 14,276 |
Opening Cash & Cash Equivalents | 0 | 14,276 | 28,552 | 42,828 |
Closing Cash & Cash Equivalents | 14,276 | 28,552 | 42,828 | 57,104 |