what effect will rex s loan have on each section of its year 1 statement of cash flo 641400
On December 31, Year 1, Rex Corporation borrowed $100,000 from the Third National Bank of Springfield. Rex has five years to pay off the note. On December 31, Year 2, Rex paid$9,000 of interest on the loan and paid off $20,000 of the loan. Rex uses the direct method to prepare its statement of cash flows.
1 What effect will Rex”s loan have on each section of its Year 1 statement of cash flows?
|
|
Operating Activities |
Investing Activities |
Financing Activities |
|
A) |
no effect |
$100,000 decrease |
$100,000 increase |
|
B) |
$100,000 increase |
no effect |
no effect |
|
C) |
no effect |
$100,000 increase |
no effect |
|
D) |
no effect |
no effect |
$100,000 increase |
2 What effect will Rex”s interest and loan payments have on each section of its Year 2
statement of cash flows?
|
|
Operating Activities |
Investing Activities |
Financing Activities |
|
A) |
$9,000 decrease |
$20,000 decrease |
no effect |
|
B) |
$9,000 decrease |
no effect |
$20,000 decrease |
|
C) |
$29,000 decrease |
no effect |
no effect |
|
D) |
no effect |
$9,000 decrease |
$20,000 decrease |