Ariqulest Brief Exercise 2-5 (Algo) Effects of recognizing accrued interest on financial statements LO 2.5 Larry Cornerstone started a company providing agency services to othletes competing at a professional level. The company experienced the following events during its first year of operations. Year 1 : 1. Financed initial operations by borrowing $31,000 from a local bank. Interest payments on the loan are not due until the loan fully matures. 2. Adjusted the accounting records on December 31 , Year 1 to recognize accrued interest expense on the bank note. The note, issued on July 1. Year 1, had a one-year term and a 6 percent annual interest rate Required: Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Note: In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, and NC for net change in cash. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require an input - leave cells blank if there is no corresponding input needed