Bonds Payable on the Balance Sheet of Michael LLC Includes

question 50

Multiple Choice

Bonds Payable on the balance sheet of Michael LLC includes one series of bonds initially issued at a premium.The entry made in the accounting records for interest expense during the period was as follows:
Interest Expense .................4,500
Premium on Bonds Payable ..........500
Cash ...............................5,000

The firm spent $5,000 of cash even though it subtracted only $4,500 of interest expense in computing net income.In preparing the statement of cash flows using the T-account work sheet

• A)subtract an additional $5,000 from net income to derive cash flow from operations.
• B)subtract an additional $4,500 from net income to derive cash flow from operations.
• C)subtract an additional $500 from net income to derive cash flow from operations.
• D)add an additional $500 from net income to derive cash flow from operations.
• E)add an additional $4,500 from net income to derive cash flow from operations.

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