At the beginning of the year, the long-term debt of a firm was $3,500,000 and total debt was $5,000,000. At the end of the year, long-term debt was $3,200,000 and total debt was $4,800,000. The interest paid was $255,000. What is the amount of the cash flow to creditors? Is the answer= -$300,000?
At the beginning of the year, the long-term debt of a firm was $3,500,000 and total debt was $5,000,000. At the end of the year, long-term debt was $3,200,000 and total debt was $4,800,000. The interest paid was $255,000. What is the amount of the cash flow to creditors? Is the answer= -$300,000?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
At the beginning of the year, the long-term debt of a firm was $3,500,000 and total
debt was $5,000,000. At the end of the year, long-term debt was $3,200,000 and total debt was $4,800,000. The interest paid was $255,000. What is the amount of the
Is the answer= -$300,000?
Expert Solution
Concept Introduction:
Short term debt is that debt or obligations, which needs to be settled in short term period of 12 months. Amount due to creditors is part of short term debt only.
Long term debt is that portion of debt which needs to be settled in long period of time, say more than 12 months. For example, long term bonds, long term notes payable etc.
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Follow-up Question
Isnt the question $3,500,000 and $3,200,000? not $35,000,000 and 32,000,000
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