Bill Darby started Darby Company on January 1, Year 1. The company experienced the following events during its first year of operation: 1. Earned $16,200 of cash revenue. 2. Borrowed $12,000 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. ok nces 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 activitles (FA). The first transaction has been recorded as an example. Complete this question by entering your answers in the tabs below. Req A and B Reg C What is the amount of interest expense and the cash paid for interest in Year 17 (Do not round Intermediate calculations.) 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. Complete this question by entering your answers in the tabs below. Req A and B Reqc What is the amount of Interest expense and the cash paid for interest in Year 17 (Do not round Intermediate calculations.) a. Interest expense be Amount of cash
a. What is the amount of Interest expense in Year 1? b. What amount of cash was paid for Interest In Year 1? 7 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. OOK Complete this question by entering your answers in the tabs below. int rences Reg A and B RealE Use a horizontal statements model to show how each event affects the balance sheet, Income statement, and statement of cash flows. Indicate 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), Inve activities (FA). The first transaction has been recorded as an example. (Not all cells will require entry) Event No. Assets DARBY COMPANY Horizontal Statements Model for Year 1 Balance Sheet Income Statement Liabilities Stockholders' Equity Notes Interest Common Retained Revenue Expenses Payable Payable Stock Earnings 1 Net Income Statement of Cash Flows Cash OA 1. 2 3. + - +
