Question

At the beginning of the year, Smidovec Plumbing had current liabilities of $15,932 and total debt of $68,847. By year end, current liabilities were $13,870 and total debt was $72,415. What is the amount of net new borrowing for the year?
a. $5,630.
b. $2,480.
c. $3,568.
d. $4,677.
e. $2,062.

Answer 1

Answer:Cash flow to creditors = Interest paid - Net new borrowing

Cash flow to creditors = Interest paid - (LTDend - LTDbeg)

Cash flow to creditors = $160,000 - ($6,400,000 - 6,000,000)

Cash flow to creditors = -$240,000

Explanation:The 2017 balance sheet of Kerber's Tennis Shop, Inc., showed long-term debt of $6 million, and the 2018 balance sheet showed long-term debt of $6.4 million. The 2018 income statement showed an interest expense of $160,000.