The amount of interest expense and total cash outflows related to the note shown on the 12/31/2014 financial statements would be:
A)Option A
B)Option B
C)Option C
D)Option D

Question

The amount of interest expense and total cash outflows related to the note shown on the 12/31/2014 financial statements would be: 
A)Option A 
B)Option B 
C)Option C 
D)Option D

Quizplus · Accepted Answer

$40,000 x 9% x 7/12 months = $2,100 interest expense in 2014. Cash outflows include $3,600 for interest (operating activities) and $40,000 for principal on the note (financing activities).

The Amount of Interest Expense and Total Cash Outflows Related