WALSH (45) likened her neighbour to "Mrs Bucket" from the TV show Keeping Up Appearances and said she had visited her that night to bring her a bottle of vodka and a Christmas card, the court heard.
She denies murder.
At the time, Walsh told police she and her husband Richard Durkin, a Dublin-based accountant, had been married for four and a half years, and they lived in a suite in Berkeley Court Hotel in Dublin during the week, coming up to the house in Newry at weekends.
Mrs Rankin, a mother-of-eight, who lived alone, was discovered on the bedroom floor of her Dublin Road, Newry home.
A broken crucifix, which hung above her bed, was lying on the floor beside her body. It is alleged that she had been beaten with the crucifix and sexually assaulted after her death.
During the police interviews, Walsh described her neighbour as "a friendly woman" who had introduced herself when she and her husband moved into the area the year before.
The mother of one said she had only met Mrs Rankin a couple of times, but had visited her house on several occasions.
The accused said that on Christmas Eve night 2008, she had called in to bring a card and a bottle of vodka.
She described how she had gone up to Mrs Rankin's bedroom and found her in the chair by the window.
She said she sat on the bed, they chatted and Mrs Rankin urged her to drink some of the vodka she had brought, which she drunk neat.
Walsh described Mrs Rankin, who had underlying health issues, as being "seriously wheezy", and she was worried about her as she believed she shouldn't be left on her own.
Walsh said she invited Mrs Rankin to spend Christmas Day with her and her family but she said her family were coming.
She said she had finally gone home when she could not find an inhaler downstairs.
Mrs Rankin was upstairs when she left the house, and she shouted down to her to make sure she closed the front door behind her.
Walsh said she had slept in her clothes that night. Her husband woke her around 11.30am on Christmas morning with news that their neighbour's house was sealed off.
Belfast Crown Court earlier heard that facial injuries suffered by Mrs Rankin were caused by being beaten with a crucifix. The trial continues.