Reference no: EM132511995
Flax Corp. uses the direct method to prepare its statement of cash flows. Flax's trial balances at December 31, Year 6 and Year 5, are as follows: December 31
Debits Year 6 Year 5
Cash $ 35,000 $ 32,000
Accounts receivable 33,000 30,000
Inventory 31,000 47,000
Property, plant, & equipment 100,000 95,000
Unamortized bond discount 4,500 5,000
Cost of goods sold 250,000 380,000
Selling expenses 141,500 172,000
General and administrative
expenses 137,000 151,300
Interest expense 4,300 2,600
Income tax expense 20,400 61,200
$756,700 $976,100
December 31
Credits Year 6 Year 5
Allowance for credit losses $ 1,300 $ 1,100
Accumulated depreciation 16,500 15,000
Trade accounts payable 25,000 17,500
Income taxes payable 21,000 27,100
Deferred income taxes 5,300 4,600
8% callable bonds payable 45,000 20,000
Common stock 50,000 40,000
Additional paid-in capital 9,100 7,500
Retained earnings 44,700 64,600
Sales 538,800 778,700
$756,700 $976,100
- Flax purchased $5,000 in equipment during Year 6.
- Flax allocated one-third of its depreciation expense to selling expenses and the remainder to general and administrative expenses, which include the provision for credit losses.
Question1 : What amount should Flax report in its statement of cash flows for the year ended December 31, Year 6, for cash paid for interest?
$1,700
$4,300
$4,800
$3,800