1. Earned $2000 of cash revenue for performing services

2.Borrowed $8000 cash from the bank

3. Adjusted the accounting records to recognize a cured interest expense and the bank note. The note, issued on August 1, year one, had a one year term and a 6% annual interest rate.

Questions:

1. What is the amount of interest expense in year one?

2. What amount of cash was paid for interest in year one?

Help Save c. Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. Indicate whether the event i Also, in the Statement of Cash Flows column, designate the cash flows as operating activities (OA), investing activities (lA), or financing activities (FA). The first transaction has been recorded as an example. (In the Statement of Cash no effect.) increases (), decreases (D), or does not affect (NA) each element of the financial statements Flows column, select "NA" if there is Stockholders' Equity Revenue-Expense Income Flows Interest Common ned No. CashNotes ayable OA NA +NA +NA