Final answer:
Option A). The $100,000 cash received from the issuance of the 120-month installment note with 8% interest should be recorded in the Cash Flow Statement as cash inflow from financing activities. The journal entry for this transaction involves debiting cash and crediting notes payable.
Step-by-step explanation:
The $100,000 cash received from the issuance of the 120-month installment note with 8% interest should be recorded in the Cash Flow Statement as cash inflow from financing activities. This is because the cash is received as a result of financing the business through the issuance of a note.
The recording of this transaction would involve a journal entry. The journal entry is as follows:
- Debit: Cash - $100,000
- Credit: Notes Payable - $100,000
This journal entry reflects the increase in cash received and the corresponding increase in liabilities (notes payable) from the financing activity.