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On June 1, xxx1, VLA the company borrowed $75,000 from the bank, and issued a note payable that had 1-year term and annual interest rate of 5%. (4 points) 5. Once VLA company issued the note, how this event will affect the accounting equation (Financial Statements- horizontal)? a) Increase Cash by $75,000, increase Notes Payable by $75,000. The cash flow will be affected by $75,000 outflow. b) Increase Cash by $78,750, increase Interest Payable by $3,750 and increase Notes Payable by $75,000 The cash flow will be affected by $78,750 inflow c) Increase Cash and increase Notes Payable by $75,000 The cash flow will be affected by $75,000 inflow. YOU MUST show your calculations: (4 points) 6. On December 31, xo.1, the company accrued interest, how this event will affect the accounting equation (Financial Statements horizontal)? a) Increase Interest Payable and decrease Retained Earnings by $2,187.50. Increase interest Expense and decrease Net Income by $2,187.50. The cash flow will not be affected by $2,187.50. b) Increase interest Payable and decrease Retained Earnings by $3,750. Increase Interest Expense and decrease Net Income by $3,750. The cash flow will not be affected by $3,750. c) Increase interest Payable and decrease Retained Earnings by $312.50 Increase interest Expense and decrease Net Income by $312.50. The cash flow will not be affected by $312.50. YOU MUST show your calculations: (4 points) 7. On May 31, xxx2, the company accrued interest, how this event will affect the accounting equation (Financial Statements-horizontal)? a) Increase interest Payable and decrease Retained Earnings by $2,187.50 Increase interest Expense and decrease Net Income by $2,187.50. The cash flow will not be affected by $2,187.50. b) Increase interest Payable and decrease Retained Earnings by $1,562.50 Increase interest Expense and decrease Net Income by $1,562.50. The cash flow will not be affected by $1,562.50. c) Increase interest Payable and decrease Retained Earnings by $3,750. Increase interest Expense and decrease Net Income by $3,750. The cash flow will not be affected by $3,750. You MUST show your calculations