Bill Darby started Darby Company on January 1, Year 1 . The company experienced the following events during its first year of operatipr: 1. Earned $1,200 of cash revenue: 2. Borrowed $2,500 cash from the bank. 3. Adjusted the accounting records to recognize accrued interest expense on the bank note. The note, issued on September 1, Year 1. had a one-year term and an 8 percent annual interest rate. Required: a. What is the amount of interest expense in Year 1? b. What amount of cash was paid for interest in Year 1? c. Use a horizontal statements model to show how each event affects the balance sheet, income statement, and statement of cash flows, Indicate whether the event increases, decreases, or increases and decreases each element of the financial statements. In the Statement of Cash Flows column, designate the cash flows as operating activities (OA), investing activities (A), or financing activities (FA) The first transection has been recorded as an example. Complete this question by entering your answers in the tabs below. a. What is the amount of interest expense in Year 1 ? b. What amount of cash was paid for interest in Year 1 ? Notet Do not round intermediate calculations. Nequired: a. What is the amount of interest expense in Year 1 ? b. What amount of cash was paid for interest in Year 1 ? c. Use a horizontal statements model to show how each event affects the balance sheet, income statement, and statement of cash fows indicate whether the everit increases, decieases, or increases and decreases each element of the financial statements. In the Statement of Cash Flows column, designate the cash flows as operating activites (OA) investing activiles (IA), or financing activities (FA) The first transaction has been recorded as an example. Complete this question by entering your answers in the tabs below. Use a horzontal statements model to show how each event affects the balance shect, income statement, and statement of cash flows. tndicate whether then em. statements, In the Statement of Cash. Flows column, designate the cash flows as operating activities (OA), Investing activities (BA), or financing activities (FA). Notet Leave cells blank if no inout is noeded