[The following information applies to the questions displayed below.]

On August 1, Year 1, Jackson Company issued a one-year $80,000 face value interest-bearing note with a stated interest rate of 9% to Galaxy Bank. Jackson accrues interest expense on December 31, Year 1, its calendar year-end.

-What is the amount of interest expense and the total cash outflow related to the note during the year ending December 31,Year 2?
Interest Expense $\quad $$\quad $$\quad $$\quad $$\quad $Cash Outflow

Question

[The following information applies to the questions displayed below.]

On August 1, Year 1, Jackson Company issued a one-year $80,000 face value interest-bearing note with a stated interest rate of 9% to Galaxy Bank. Jackson accrues interest expense on December 31, Year 1, its calendar year-end.

-What is the amount of interest expense and the total cash outflow related to the note during the year ending December 31,Year 2?
Interest Expense $\quad $$\quad $$\quad $$\quad $$\quad $Cash Outflow

Quizplus · Accepted Answer

Year 2 Interest expense = $80,000 × 9% × 7/12 months = $4,200
Year 2 Payment of interest = $80,000 × 9% × 12/12 months = $7,200
Year 2 Cash outflows = Interest paid of $7,200 (operating activities)and Principal repayment of $80,000 (financing activities)= $87,200

[The Following Information Applies to the Questions Displayed Below \quad

[The Following Information Applies to the Questions Displayed Below $\quad$