The 2017 balance sheet of Kerber’s Tennis Shop, Inc., showed long-term debt of $1.87 million, and the 2018 balance sheet showed long-term debt of $2.21 million. The 2018 income statement showed an interest expense of $255,000. What was the firm’s cash flow to creditors during 2018?

Cash flow to creditors in 2018 is −$85,000

Explanation:

2017 balance sheet of Kerber’s Tennis Shop, Inc is recorded as

Interest paid$255,000

Less:

long-term debt in 2018$2.21 million

Less: long-term debt brought forward from 2017$1.87 million

Total (taken as net new borrowing)$340,000

Cash flow to creditors = 2018 Interest expense less net new borrowing

= $255,000 - $340,000

= −$85,000

The cash flow for Kerber's tennis shop for the year 2018 to creditor's is -$85,000

Explanation:

Balance sheet of Kerber’s Tennis Shop for 2017, Inc is recorded as follows

Given that.

Interest paid = $255,000

Less:

long-term debt in 2018$ = 2.21 million

Less:

long-term debt brought forward from 2017 = $1,870,000 million

Total (taken as net new borrowing)

= $2,210,000- $1,870,000

= $340,000

Cash flow to creditors = 2018 Interest expense less net new borrowing

= $255,000 - $340,000

= −$85,000

We have -$85,000 as the cash flow to creditors during 2018

(a) when insurance is obtained through a reciprocal insurer, the insureds are sharing the risk of loss with other subscribers of that reciprocal.

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