Medstar Radiology Clinic
Information from the Company's Financial Records Is

Medstar Radiology Clinic
Information from the company's financial records is presented in the following table:
$\begin{array}{lr}\text { Notes payable, December 31, Year 1 } & \$ 1,000,000 \\\text { Notes payable, December 31, Year 2 } & 1,200,000 \\\text { Loss on note retirement - Year 2 } & 45,000 \\\text { Interest expense on bonds - Year 2 } & 75,000\end{array}$ At the end of Year 2, the company issued notes at par value for $1,200,000 cash. The proceeds were used to retire the $1,000,000 note issue outstanding at the end of Year 1 (before the maturity date) . All interest expense was paid in cash during Year 2.
-Refer to the figure Medstar Radiology Clinic.How is the information included in the statement of cash flows?

A) Proceeds of $1,200,000 from the issuance of notes were reported as a cash inflow in the financing activities section.
B) The loss of $145,000 on note retirement was added to net income in the operating activities section.
C) Payments of $1,260,000 were reported as a cash outflow in the investing activities section.
D) Interest expense of $175,000 was not reported separately because it was included in net income in the operating activities section.