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.

Question

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.

Quizplus · Accepted Answer

The Answer of 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.

Bonds Payable on the Balance Sheet of Michael LLC Includes