Pella Company issued bonds with a face value of 5000000 on J

Pella Company issued bonds with a face value of $5,000,000 on January 1 cash on December 31 of each year. Based on this information alone, the an on the 2014 statement of cash flows would be: Interest Expense Cash Outflow A) B) C)$ 400,000 D400,000 zero zero zero $ 400,000 zero 400,000 O Choice A O ChoiceB O Choice D O Choice C

Solution

C. Choice D

The amount of interest expense shown on the 2014 income statement and the cash flow from operating activities shown on the 2014 statement of cash flows would be:

= $5,000,000 * 8%

= $400,000