1. On July 1, 2014, Allen Company signed a $135,000, one-year, 6 percent note payable. The principal and interest will be paid on June 30, 2015. How much interest expense should be reported on the income statement for the year ended December 31, 2014?

2. Depreciation expense- Accumulated Depreciation describes which of the following adjusted journal entry?

Liabilities will increase. Total assets decrease.

Stockholders' equity is not affected. Net income increases.