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

operation:

Earned $$1,500$ of cash revenue.

Borrowed $$2,100$ cash from the bank.

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 $7$ 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 $1?$

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 $($I$)$ 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.