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Bill Darby started Darby Company on January 1, Year 1. The company experienced the following events during its first year of operation: 1. Earned $1,500

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Bill Darby started Darby Company on January 1, Year 1. The company experienced the following events during its first year of operation: 1. Earned $1,500 of cash revenue. 2. Borrowed $2,200 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 9 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 octivities (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. a. What is the amount of interest expense in Year 1? b. What armount of cash was pald for interest in Year 1 ? Note Do not round intermediate calculations. 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 increas statements. In the Statement of Cash Flows column, designate the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA) . The first to Note: Learve celis blank if no input is needed. Income statement, and statement of cash flows. Indicate whether the event increases, decreases, or increases and decreases each element of the fit perating activities (OA), investing activities (IA), or financing activities (FA). The first transaction has been recorded as an example

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