Please answer 1 question below according to the Miller Corporation

Year 20X3 During the year, you paid the amounts owed for Motorcycles at the end of year 20X2 and collected all the amounts owed by customers for 20X2. You purchased 25 more Motorcycles for $6,000 each and at the same terms as in 20X2. During the year, you sold 22 Motorcycles for $11,000 each at the same terms as 20X2. You paid the money owed to suppliers (Accounts Payable) at the beginning of the year and collected all money due you at the beginning of the year (Accounts Receivable). You use the FIFO inventory system. On January 1, 20X3, you purchased furniture and fixtures for $55,000. You put $15,000 down and financed the remaining amount at 10%. You will make annual payments on December 31st for four years that include the interest accrued to date plus $10,000 on the principal each year. You estimate that you will use them for 10 years and then they will be worth $5,000. On June 30th, you paid $3,600 for a twoyear insurance policy; office expenses of $12,000; $4,500 for advertising in The Post; utilities of $6,000; and Supplies of $1,500. You also paid $26,000 for 13 months of rent. You paid your worker $18,000 (includes amount owed from prior year) and owed her $2,000 more at the end of the year. On December 31st, you paid the first payment on the furniture and fixtures loan. Paid Uncle Mike his interest and paid the principal balance owed on December 31st. This year you declared and paid a dividend of $4,000 to your shareholders. On October 1st you issued 30 shares of common stock for $3,000. You paid the 20X2 taxes. The 20X3 taxes will be paid in 20X4. The tax rate is 21%. Prepare the Journal Entries (including the closing entry), Taccounts, and all four Financial Statements (in good form). Miller Corporation Year 20X4 During the year, you bought 31 more Motorcycles for $6,500 each and sold 29 for $12,000 each, same terms as last year. You paid the money owed to suppliers (Accounts Payable) at the beginning of the year and collected all money due you at the beginning of the year (Accounts Receivable). On January 1st, you purchased a delivery truck for $41,000. You made a down payment of $10,000 and financed the balance at 7%. You will make four equal payments that include interest @ 7%. You make the first payment on December 31st of this year. You estimate the truck will last about 6 years and then be worth $5,000. You paid your worker $17,000 (includes amount owed from prior year) and owed her $2,000 more at One part of financial analysis is analyzing the same company over many years using a trend analysis. Using the information you prepared for Assignment #3 (the Accounting Cycle Problem) for Miller Corp., answer the following questions:

Below is the answer of assignment 3:

Miller Corporation has shown good financial performance year on year basis. In third year of operations, the company has generated net income $28,835 and gross profit is $114,000. The revenue of the company is $242,000 during third year of operations. The gross profit margin of the company is 47.10% and net profit margin is 11.92%. The revenue of the company is growing year on year basis, but the net profit margin and gross margin have slightly reduced in third year. The company should try to improve its gross profit margin and net profit margin to grow at speedy rate. The company has generated $40,656 from operations which has been utilized for investing and financing activities. The net changes in cash flows have slightly reduced which shows that the company has utilized its cash balance $10,944 to pay finance obligations during the third year of operations. The total assets of the company are $345,732 as on year 20X3 and the assets partly financed from liability and equity i.e. $152,165 from liability and $193,567 from equity. It shows that the majority assets are financed from equity and the company has reduced its debt obligations during the year. During fourth year of operations, the revenue, gross profit and net profit of the company are $348,000, $162,000 and $56,114 respectively. The gross margin of the company is 46.55% and net profit margin is 16.12%. The gross margin I fourth year is equivalent to third year of operations and the net profit margin o the company has increase in comparison to third operations and the net profit margin of the company has increased in comparison to third year. It shows that the company has improved its profitability and has utilized its resources more effectively and efficiently. The company has generated $64,060 from operations and the amount has been utilized for investing activities. Further the total asset base of the company has also increased, and the financial position and financial performance of the company has improved year on year basis which is a healthy indicator for the company. Miller Corporation has shown good financial performance year on year basis. In third year of operations, the company has generated net income $28,835 and gross profit is $114,000. The revenue of the company is $242,000 during third year of operations. The gross profit margin of the company is 47.10% and net profit margin is 11.92%. The revenue of the company is growing year on year basis, but the net profit margin and gross margin have slightly reduced in third year. The company should try to improve its gross profit margin and net profit margin to grow at speedy rate. The company has generated $40,656 from operations which has been utilized for investing and financing activities. The net changes in cash flows have slightly reduced which shows that the company has utilized its cash balance $10,944 to pay finance obligations during the third year of operations. The total assets of the company are $345,732 as on year 20X3 and the assets partly financed from liability and equity i.e. $152,165 from liability and $193,567 from equity. It shows that the majority assets are financed from equity and the company has reduced its debt obligations during the year. During fourth year of operations, the revenue, gross profit and net profit of the company are $348,000, $162,000 and $56,114 respectively. The gross margin of the company is 46.55% and net profit margin is 16.12%. The gross margin I fourth year is equivalent to third year of operations and the net profit margin o the company has increase in comparison to third operations and the net profit margin of the company has increased in comparison to third year. It shows that the company has improved its profitability and has utilized its resources more effectively and efficiently. The company has generated $64,060 from operations and the amount has been utilized for investing activities. Further the total asset base of the company has also increased, and the financial position and financial performance of the company has improved year on year basis which is a healthy indicator for the company.

10. If notes payable increased in 20X4, why did interest expense decrease?