On June 1, 2014, Siebens Enterprises loaned $20,000 to Tyler Company for one year at 8 percent interest. Under the terms of the promissory note, Tyler will repay the principal and pay one year's interest on May 31, 2015.
What amounts will Siebens report on its 2015 statement of cash flows?
A) An operating cash inflow of $1,600 and a cash inflow of $20,000 shown as an investing activity
B) An operating cash inflow of $1,600 and a financing cash inflow of $20,000
C) An investing activity cash inflow of $20,000 and a financing cash inflow of $1,600
D) $21,600 cash inflow from financing activities

Question

Quizplus · Accepted Answer

The interest received ($1,600) is reported as an operating cash inflow, and the repayment of the principal ($20,000) is reported as an investing activity cash inflow.

On June 1, 2014, Siebens Enterprises Loaned $20,000 to Tyler