3. Identify and analyze the effect of the payment of principal and interest. Activity Financing Accounts Cash Decrease, Notes Payable Decrease, Interest Payable Decrease, Interest Expense Increase Statement(s) Balance Sheet and Income Statement Feedback Check My Work Identify and analyze the transaction by using the following steps: 1. Determine activity - Operating, investing or financing. 2. Determine accounts affected and the amount of increases/decreases. 3. Determine the financial statements affected - balance sheet, income statement. The accounting equation must balance for each transaction. How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Use months in calculation. Do not round intermediate calculations. If required, round your final answer to the nearest dollar. Balance Sheet Income Statement Stockholders Net Assets Liabilities Equity Revenues Expenses Income Cash -23,467 Notes Payable -22,000 -587 Interest Expense 587 -23,467 X Interest Payable -880 Feedback Check My Work Partially correct Feedback Check My Work Partially correct