The December 31, 2009, balance sheet of Schism, Inc., showed long-term debt of $

Question

The December 31, 2009, balance sheet of Schism, Inc., showed long-term debt of $1.385 million, and the December 31, 2010, balance sheet showed long-term debt of $1.55 million. The 2010 income statement showed an interest expense of $92,500.

What was the firm's cash flow to creditors during 2010?

The December 31, 2009, balance sheet of Schism, Inc., showed long-term debt of $1.385 million, and the December 31, 2010, balance sheet showed long-term debt of $1.55 million. The 2010 income statement showed an interest expense of $92,500.

Explanation / Answer

$72,500 Opening Long term Debt    1,385,000.00 Closing Long term Debt    1,550,000.00 Net Money raised from creditors(Closing - Opening LTD)        165,000.00 Interest Expense(Assuming Paid since not appearing in BS)          92,500.00 Net cash inflow(165000-92500)          72,500.00

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