Question

Dec. 31 2013 balance sheet of Schism Inc., showed long term debt of $1,435,000, and Dec. 31 2014 balance sheet showed long term debt of 1,650,000. 2014 income statement showed an interest expense of $97,500. What is the firms cash flow to creditors during 2014?

Answer 1

The firm's cash flow to creditors during 2014 is $312,500.

Step-by-step explanation:

To calculate the firm's cash flow to creditors during 2014, we need to find the change in the long-term debt and add back the interest expense. The change in long-term debt is the difference between the 2014 and 2013 values, which is $1,650,000 - $1,435,000 = $215,000.

Next, we add back the interest expense of $97,500. Therefore, the firm's cash flow to creditors during 2014 is $215,000 + $97,500 = $312,500.