to M Notes Pay. 1- Int. Pay. + Comm. 4- Bet. Earn. i Rev. Exercise 7-2 E'ects of mcoguizing accrued interest on nancial statements R.T. Jackson started Jackson Company on January 1, 2014. The company experienced the fol- lowing events during its rst year of operation: 1. Earned $3,000 of cash revenue for performing services. 2. Borrowed $4,800 cash from the bank. 3. Adjusted the accounting records to recognize accrued interest expense on the bank note. The note, issued on August 1, 2014, had a one-year term and a6 percent annual interest rate. Required at. What is the amount of interest expense in 2014? b. What amount of cash was paid for interest in 2014? (2. Use a horizontal statements model to show how each event affects the balance sheet, income statement, and statement of cash ows. Indicate whether the event increase: (1), decreases . (D), or does not affect (NA) each element of the nancial statements. In the Cash Flows -_ column, designate the cash ows as operating activities (0A), investing activities (IA), or I nancing activities (FA). The rst transaction has been recorded as an exempts. Balance Sheet '4: Income Statement , ' summer ~ t3 MA ..' + NA+ NA + l