Bill Darby started Darby 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. 2. Borrowed $2,700 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 5 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 (1) or decreases (D), or if there is no effect, leave the cell blank. In the Cash Flows column, designate the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction has been recorded as an example. Req A and B Req C What is the amount of interest expense and the cash paid for interest in Yea round your final answer to nearest whole dollar amount.) a Interest expense b. Amount of cash Req A and B Req 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 decreases (D), or if there is no effect, leave the cell blank. In the Cash Flows column, designate the cash flows as operating activities (OA), investing activit activities (FA). The first transaction has been recorded as an example. (Not all cells will require entry.) ook DARBY COMPANY Horizontal Statements Model for Year 11 Balance Sheet Income Statement ferences Event No. Assets Liabilities Stockholders' Equity Statement of Cash Notes Pakable Interest Payable Common Stock Retained Earnings Revenue Expenses Net Income: Cash Flows OA 1 T 2 + 3