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Exercise 9-2A (Algo) Effects of recognizing accrued interest on financial statements LO 9.1 Bill Daby...

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Accounting

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Exercise 9-2A (Algo) Effects of recognizing accrued interest on financial statements LO 9.1 Bill Daby started Darby Company on January 1 . Year 1 The company experienced the following events during its first year of operation: 1. Earned $1700 of cash revenue 2. Borrowed $3,000 cash from the bank. 3. Adjusted the accounting records to recognize accrued tinterest expense on the bank note. The note, issued on September 1, Year 1 , had a one-year term and an 9 percent annual interest rate. Required: a. What is the amount of interest payable at December 3t, Year 1 ? b. What is the amount of interest expense in Year 1 ? c. What is the amount of interest pald in Year ? d. Use a horizontal statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. The first transaction has been recorded as an example

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