United Company purchased equipment on June 1, 2011, and gave a 10-month, 5% note with a face value of $20,000 with interest and principal payable at maturity. How much interest expense will be recognized on the income statement for the year ended December 31, 2011? What effect does the adjustment for interest have on the statement of cash flows for 2011? Is the adjustment to record the interest expense an accrual or a deferral?
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