Victor Company issued bonds with a $600,000 face value and a 6% stated rate of interest...
Victor Company issued bonds with a $600,000 face value and a 6% stated rate of interest on January 1, Year 1. The bonds carried a 5-year term and sold for 96. Victor uses the straight-line method of amortization. Interest is payable on December 31 of each year. The amount of cash flow from operating activities on the December 31, Year 3 statement of cash flows would be:
Homework Answers
Answer
--The amount of cash flow from operating activities on the
December 31, Year 3 statement of cash flows would be
= $ 600000 face value x 6% stated interest rate
= $ 36,000 cash interest paid.
--Amount to be shown in Statement of Cash flows under ‘operating
activities’ as--
> Cash paid for interest $ (36,000) [outflow]
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