Question

8, Cash Flow to Creditors The 2016 balance sheet of Maria's Tennis Shop, Inc.,showed long-term debt of $2.4 million, and the 2017 balance sheet showed long-term debt of $2.53 million. The 2017 income statement showed an interest expense of $ 1 87,000. What was the firm's cash ow to creditors during 2017?

please so all work

Answer 1

Solution:

Cash flows to creditors = Interest paid - Net new borrowing
= Interest paid - [(long term debt(END) - long term debt(BEG)]
=$187,000 - [$2,530,000 - $2,400,000]
=$57,000