Exercise $9-2$A $($Algo$)$ Effects of recognizing accrued interest on financial statements LO $9-1$

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

Earned $$1,100$ of cash revenue.

Borrowed $$2,500$ 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 $4$ 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 $(1)$ or decreases $($D$)$ each element of the financlal statements. In the Statement of Cash Flows column, classify the cash flows as operating activities $($OA$),$ Investing activities $($IA$)$ or financing actlvitles $($FA$).$ Columns for events that have no effect on any of the elements should be left blank. The first transactlon has been recorded as an example.

Complete this question by entering your answers in the tabs below.

Req A$.$ to C

Req $0$

What is the a mount of interest payable at Oecember $31,$ Year $1?$

Note: Do nok round intermediate calculations. Round your answer to the nearest dollar amount.

What is the amount of interest expense in Year $1?$

Note: Do not round intermediate calculations. Round your answer to the nearest dollar amount.

What is the a mount of interest paid in Year $1?$

$\backslash$table$[[$a$.$ Inferest payable,,$],[$b$.$ Inferest expense,$|7||,$BP$],[$e$.$ Amount of cash paid,,$]]$

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