Bill Darby started Darby Company on January 1, Year 1. The company experienced the following events during its first year of operation: 1. Earned $1,400 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 payable at December 31, Year 1? b. What is the amount of interest expense in Year 12 c. What is the amount of interest paid in Year 1? d. 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) each element of the financial statements. In the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA) or financing activities (FA), Columns for events that have no effect on any of the elements should be left blank. The first transaction has been recorded as an example. Complete this question by entering your answers in the tabs below. Reg A to C Reg D What is the amount of interest payable at December 31, Year 12 (Do not round intermediate calculations, Round your answer to the nearest dollar amount.) What is the amount of interest expense Year 17 (Do not round Intermediate calculations. Round your answer to the nearest dollar amount.) What is the amount of interest paid in Year 17 Show less Interest payable Requieu . What is the amount of interest payable at December 31, Year 1? 5. What is the amount of interest expense in Year 1? . What is the amount of interest paid in Year 1? d. Use a horizontal statements model to show how each event affects the balance sheet, income statement, and statement flows. Indicate whether the event increases (1) or decreases (D) each element of the financial statements. In the Statemento Flows column, classify the cash flows as operating activities (OA), investing activities (IA) or financing activities (FA). Columns that have no effect on any of the elements should be left blank. The first transaction has been recorded as an example. Complete this question by entering your answers in the tabs below. Req A to C Reg D What is the amount of interest payable at December 31, Year 1? (Do not round intermediate calculations. Round your answer to the nearest dollar amount.) What is the amount of interest expense In Year 1? (Do not round Intermediate calculations. Round your answer to the nearest dollar amount.) What is the amount of interest paid in Year 1? Show less b. Interest payable Interest expense Amount of cash paid C HA RegD> 31, Year What is the amount of interest expense in Year 1? What is the amount of interest paid in Year 1? Use a horizontal statements model to show how each event affects the balance sheet Income statement, and statement of cash ws. Indicate whether the event increases (I) or decreases (D) each element of the financial statements. In the Statement of Cash ows column, classify the cash flows as operating activities (OA), investing activities (A) or financing activities (FA). Columns for events at have no effect on any of the elements should be left blank. The first transaction has been recorded as an example. Complete this question by entering your answers in the tabs below. Reg A to C Reg D 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 the financial statements. In the Statement of Cash Flows column, classify the cash flows as operating activities (OA), Investing activities (IA) or financing activities (FA). any of the elements should be left blank. The first transaction has been recorded as an example. (Note: Not all cells will require an input) DARBY COMPANY Horizontal Statement Model for Year 1 Balance Sheet Income Statement Expanse Event Assets Liabilities Revenue Net Income Stockholders'Equity Common Retained Stock Earnings Statement of Cash Flows No Cash Notes Payable Interest Payable 1 - 1 1 OA . 2. 3 .
