Question

At the beginning of the year, long-term debt of Husky Company is $6,163 and total debt...

At the beginning of the year, long-term debt of Husky Company is $6,163 and total debt and liabilities are $8,027. At the end of the year, long-term debt is $6,259 and total debt and liabilities are $9,120. The interest paid is $325. What is the amount of the cash flow to creditors?

-$75

$229

$185

$203

-$158
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Homework Answers

Answer #1

$229

Working:

Cash flow to creditors = Interest Expense - Net New Borrowing
= $325.00 - $96.00
= $229.00
Working:
Net New Borrowing = Ending Long term debt - Beginning long term debt
= $6,259 - $6,163
= $96

Note:

Cash flow to creditors means that how much cash paid for long term debt .In this question, we have paid interest of $ 325 and received new debt of $ 96 meaning that net amount of $ 229 was paid during the year to creditors.

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