Question

QUESTION 9 During Year 1, El Paso Company had the following changes in account balances The Accumulated Depreciation account had a beginning balance of $62,500 and an ending balance of $87,500. The increase was due to depreciation expense. The Long-Term Notes Payable account had a beginning balance of $100,000 and an ending balance of $45,000. The decrease was due to repayment of debt. The Equipment Account had a beginning balance of $75,000 and an ending balance of $232,500. The increase was due to the purchase of other operational assets. The Long-Term Investments Account (Marketable Securities) had a beginning balance of $54,000 and an ending balance of $37,500 The decrease was due to the sale of investments at cost. . The Dividends Payable account had a beginning baance of $36,000 ad an ending balance of $30,000. There were $60,000 of dividends declared during the period. The Interest Payable account had a beginning balance of $6750 and an ending balance of $3750. The difference was due to the payment of interest. What is the net cash flow from financing activities? $66,000 inflow $121,000 outflow $55,000 inflow $55,000 outflow
On January 1, Year 1, Weller Company issued bonds with a $230,000 face value, a stated rate of interest of 10.00%, and a 10-year term to maturity. Weller uses the effective interest method to amortize bond discounts and premiums. The market rate of interest on the date of issuance was 8.00%. Interest is paid annually on December 31.

Answer 1

9)Correct option is "B"

Repayment of long term note payable [100000-45000]	(55000)
Dividend paid [36000+60000-30000]	(66000)
cash flow from financing activity	(121000)

10)Interest paid = 230000*10% =23000

Date	Interest paid	Interest expense	premium amortised	carrying value at end
year 1	23000	248240*8%= 19859.2	3140.8	248240-3140.8= 245099.2
2	23000	19607.94   [245099.2*.08]	3392.06	245099.2-3392.06= 241707.14
3	23000	19336.57	3663.43	238043.71

Correct option is "B" - 19337