The following transactions apply to Pecan Co. for Year 1, itsfirst year of operations:

1. Received $38,000 cash in exchange for issuance ofcommon stock.
2. Secured a $101,000 ten-year installment loan from State Bank.The interest rate is 6 percent and annual payments are$13,723.
3. Purchased land for $20,000.
4. Provided services for $115,000.
5. Paid other operating expenses of $39,000.
6. Paid the annual payment on the loan.

Required

1. Organize the transaction data in accounts under an accountingequation.
2. Prepare an income statement and balance sheet for Year 1.
3. What is the interest expense for Year 2? Year 3?

The following transactions apply to Pecan Co. for Year 1, itsfirst year of operations:

1. Received $38,000 cash in exchange for issuance ofcommon stock.
2. Secured a $101,000 ten-year installment loan from State Bank.The interest rate is 6 percent and annual payments are$13,723.
3. Purchased land for $20,000.
4. Provided services for $115,000.
5. Paid other operating expenses of $39,000.
6. Paid the annual payment on the loan.

Required

1. Organize the transaction data in accounts under an accountingequation.
2. Prepare an income statement and balance sheet for Year 1.
3. What is the interest expense for Year 2? Year 3?

PECAN COMPANY Effect of Events on the AccountingEquation Event No. Assets = Liabilities + Stockholders' Equity Account Titles for RetainedEarnings Cash + Land = Note Payable + Common Stock + Retained Earnings Year 1 1. + = + + 2. + = + + 3. + = + + 4. + = + + 5. + = + + 6. + = + + Bal. 0 + 0 = 0 + 0 + 0

	PECAN COMPANY Income Statement For the Year Ended December 31, Year1 Non-operating items:

	PECAN COMPANY Balance Sheet As of December 31, Year 1 Assets Total assets $0 Liabilities Total liabilities 0 Stockholders' Equity Total stockholders' equity 0 Total liabilities and stockholders'equity $0

	Year 2 Year 3 Interest expense