On January 1, 2014, Sol Company issued bonds with a face value of $100,000 at 105. The bonds will mature in 5 years. Interest at 10% was payable in cash on December 31 of each year. The premium will be amortized using the straight line method. Based on this information, 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: $$\begin{array} { l c r l r }
& \text { Interest } &{ \text { Cash } } \
& \text { Expense } & { \text { Outflow } } \
\text { A) } & \$ 11,000 & \$ 10,000 \
\text { B) } & \$ 9,000 & \$ 10,000 \
\text { C) } & \$ 10,500 & \$ 10,000 \
\text { D) } & \$ 10,000 & \$ 10,000
\end{array}$$

Question

On January 1, 2014, Sol Company issued bonds with a face value of $100,000 at 105. The bonds will mature in 5 years. Interest at 10% was payable in cash on December 31 of each year. The premium will be amortized using the straight line method. Based on this information, 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: $$\begin{array} { l c r l r } 
& \text { Interest } &{ \text { Cash } } \
& \text { Expense } & { \text { Outflow } } \
\text { A) } & \$ 11,000 & \$ 10,000 \
\text { B) } & \$  9,000 & \$ 10,000 \
\text { C) } & \$ 10,500 & \$ 10,000 \
\text { D) } & \$ 10,000 & \$ 10,000
\end{array}$$

Quizplus · Accepted Answer

The Answer of On January 1, 2014, Sol Company issued bonds with a face value of $100,000 at 105. The bonds will mature in 5 years. Interest at 10% was payable in cash on December 31 of each year. The premium will be amortized using the straight line method. Based on this information, 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: $$\begin{array} { l c r l r } 
& \text { Interest } &{ \text { Cash } } \
& \text { Expense } & { \text { Outflow } } \
\text { A) } & \$ 11,000 & \$ 10,000 \
\text { B) } & \$  9,000 & \$ 10,000 \
\text { C) } & \$ 10,500 & \$ 10,000 \
\text { D) } & \$ 10,000 & \$ 10,000
\end{array}$$

On January 1, 2014, Sol Company Issued Bonds with a Face