Alsup Company Had the Following Transactions During the Fiscal Year

Alsup Company had the following transactions during the fiscal year ended December 31, Year 4.
·Accounts receivable decreased from $115,000 on December 31, Year 3, to $100,000
On December 31, Year 4.
·Alsup's Board of Directors declared dividends on December 31, Year 4, of $.05
Per share on the 2.8 million shares outstanding, payable to shareholders of record
On January 31, Year 5.The company did not declare or pay dividends for fiscal year,
Year 3.
·Sold a truck with a net book value of $7,000 for $5,000 cash, reporting a loss of $2,000.
·Paid interest to bondholders of $780,000.
·Cash increased from $106,000 on December 31, Year 3, to $284,000 on December 31, Year 4.

(CMA Dec 95 #2) Refer to the Alsup Company example.Alsup Company uses the direct method to prepare its statement of cash flows at December 31, Year 4.The interest that is paid to bondholders would be reported in the

A) Financing Section, as a use or outflow of cash.
B) Operating Section, as a use or outflow of cash.
C) Investing Section, as a use or outflow of cash.
D) Debt Section, as a use or outflow of cash.
E) Financing Section, as a source or inflow of cash.