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Cloud [144]
3 years ago
6

The 2017 balance sheet of Kerber’s Tennis Shop, Inc., showed long-term debt of $1.87 million, and the 2018 balance sheet showed

long-term debt of $2.21 million. The 2018 income statement showed an interest expense of $255,000. What was the firm’s cash flow to creditors during 2018?
Business
2 answers:
bezimeni [28]3 years ago
8 0

Answer:

Cash flow to creditors in 2018 is −$85,000

Explanation:

2017 balance sheet of Kerber’s Tennis Shop, Inc is recorded as

Interest paid............................................................................$255,000

Less:

long-term debt in 2018.........................................................$2.21 million

Less: long-term debt brought forward from 2017..........$1.87 million

Total (taken as net new borrowing)...................................$340,000

Cash flow to creditors = 2018 Interest expense less net new borrowing

= $255,000 - $340,000

= −$85,000

REY [17]3 years ago
5 0

Answer:

The cash flow for Kerber's tennis shop for the year 2018 to creditor's is -$85,000

Explanation:

Balance sheet of Kerber’s Tennis Shop for 2017, Inc is recorded as follows

Given that.

Interest paid = $255,000

Less:

long-term debt in 2018$ = 2.21 million

Less:

long-term debt brought forward from 2017 = $1,870,000 million

Total (taken as net new borrowing)

= $2,210,000- $1,870,000

= $340,000

Cash flow to creditors = 2018 Interest expense less net new borrowing

= $255,000 - $340,000

= −$85,000

We have -$85,000 as the cash flow to creditors during 2018

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