Ben Bradley started Bradley Company on January 1, Year 1. The company experienced the following events during its first year of operation: 1. Earned $1,900 of cash revenue for performing services. 2. Borrowed $3,400 cash from the bank. 3. Adjusted the accounting records to recognize accrued interest expense on the bank note. The note, issued on August 1, Year 1, had a one-year term and a 6 percent annual interest rate Required a. What is the amount of interest expense in Year 1? Interest expenso b. What amount of cash was paid for interest in Year 1? Interest payment 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 increases (1) or decreases (D) each element of the financial statements model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction has been recorded as an example. (Note: Not all cells will require an input.) Statement of Cash Flows Assets BRADLEY COMPANY Horizontal Financial Statement Model for Year 1 Balance Sheet Income Statement Net Liabilities - Stocklyplders' Equity Revenue Expense Income Notes Interest Common Retained Payable Payable Stock Earnings 1 Event No Cash 1 1 + 1 1 2 3