Cash Flow to CreditorsThe 2017 balance sheet of Kerber's Tennis Shop inc., showed long-term debt of $1.87 million, and the 2018 balance sheet showed long-term debt of $2.21 million. The 2018 income statement showed an interest expense of $255,000. What was the firm's cash flow to creditors during 2018?

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Asked Sep 4, 2019
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Cash Flow to Creditors

The 2017 balance sheet of Kerber's Tennis Shop inc., showed long-term debt of $1.87 million, and the 2018 balance sheet showed long-term debt of $2.21 million. The 2018 income statement showed an interest expense of $255,000. What was the firm's cash flow to creditors during 2018? 

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Expert Answer

Step 1

Calculation of cash flow to creditors:

Hence, the cash flow to creditors during 2018 is -$85,000.

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A B Amount Particulars (S) 1 Interest paid (a) S255,000 3 Less: 4 Net new borrowings: Longterm debt at the end 6 Less: Longterm debt in the beginning $1,870,000 7 Net new borrowings (b) $2,210,000 $340,000 9 Cash flow to creditors (a)-(b) (S85,000) N Ln

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