The 2014 balance sheet of Sugarpova’s Tennis Shop, Inc., showed long-term debt o
ID: 2797110 • Letter: T
Question
The 2014 balance sheet of Sugarpova’s Tennis Shop, Inc., showed long-term debt of $6.2 million, and the 2015 balance sheet showed long-term debt of $6.6 million. The 2015 income statement showed an interest expense of $170,000.
What was the firm’s cash flow to creditors during 2015? (Negative amount should be indicated by a minus sign. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
The 2014 balance sheet of Sugarpova’s Tennis Shop, Inc., showed long-term debt of $6.2 million, and the 2015 balance sheet showed long-term debt of $6.6 million. The 2015 income statement showed an interest expense of $170,000.
Explanation / Answer
net new borrowings=(6.6-6.2)million=$400,000
Hence cash flow to creditors=interest paid-net new borrowings
=(170,000-400000)
=$(230,000)(Negative)
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