Question

On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $49,500 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 $14,285 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 $22,275 cash per year.

	BROWN CO. Balance Sheet As of December 31 2018 2019 2020 2021 Assets Cash Land Total assets $0 $0 0 0 Liabilities Notes payable Total liabilities 0 0 0 0 Stockholders' Equity Retained earnings Accounts receivable Total stockholders' equity 0 0 0 0 Total liabilities and stockholders' equity $0 $0 $0 $0

Answer 1

Year	Beginning Balance	Interest @6%	Payment	Ending Balance
2018	$          49,500	$           2,970	$        14,285	$      38,185
2019	$          38,185	$           2,291	$        14,285	$      26,191
2020	$          26,191	$           1,571	$        14,285	$      13,477
2021	$          13,477	$              808	$        14,285	$               -

BROWN CO.
Balance Sheet
As of December 31
	2018	2019	2020	2021
Assets
Cash	$           7,990	$        15,980	$      23,970	$       31,960
Land	$        49,500	$        49,500	$      49,500	$       49,500
Total assets	$        57,490	$        65,480	$      73,470	$       81,460
Liabilities
Notes payable	$        38,185	$        26,191	$      13,477	$                -
Total liabilities	$        38,185	$        26,191	$      13,477	$                -
Stockholders' Equity
Retained earnings	$        19,305	$        39,289	$      59,993	$       81,460
Total stockholders' equity	$        19,305	$        39,289	$      59,993	$       81,460
Total liabilities and stockholders' equity	$        57,490	$        65,480	$      73,470	$       81,460