Answer: Interest expense = $45500
Cash outflow = $45500
Explanation:
Based on the information that were given in the question, the amounts of interest expense and cash flows from operating activities, that will be reported in the financial statements for the year ending December 31, Year 1 will be calculated thus:
Interest expense = $700,000 × 6.50%
= $700,000 × 0.065
= $45500
The interest expense of $45500 will be reported on December 31, Year 1 in the income statement and will also be reported in the cash outflow as well. Therefore,
Interest expense = $45500
Cash outflow = $45500
Answer:
S/N Account Titles and Explanation Debit Credit
A Supplies $5,300
Cash $5,300
(To record the purchase of supplies for cash)
B Salaries and wages expense $
4,480
Cash $4,480
(To record the payment of wages and salaries)
C Prepaid rent $
560
Cash $560
(To record the payment of prepaid rent for July)
D Accounts receivable
$13,400
Service revenue $13,400
(To record the services provided on account)
E Accounts payable $800
Cash $800
(To record the payment made on Accounts payable)
F Cash $310
Unearned revenue/Deferred revenue $310
(To record the unearned services revenue)
G Repairs and maintenance expense $410
Accounts payable $410
(To record the accounts payable for repairs expenses incurred)
H Equipment $740
Cash $740
(To record the purchase of equipment for cash)
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