# The December 31, 2015, balance sheet of Schism, Inc., showed a long-term debt of $1,415,000, and... ## Question: The December 31, 2015, balance sheet of Schism, Inc., showed a long-term debt of$1,415,000, and December 31, 2016, balance sheet showed a long-term debt of $1,610,000. The 2016 income statement showed an interest expense of$95,500.

What was the firm's cash flow to creditors during 2016?

## Long-Term Debt:

The debt represents an amount that a company owes to another company and can be classified as short-term debt if the amount borrowed will be repaid within a year and if the repayment period exceeds one year, then the debt will be classified as long-term. The lender also called as creditor gets a fixed interest income on the amount lent which is nothing but the cashflow to the creditors of the company.

Schism, Inc's cash flow to creditors during 2016 is -$99,500. Explanation: Schism, Inc has provided that: • Beginning balance in Long-term debt =$1,4150,000
• Ending balance in Long-term debt = $1,610,000 • Amount of Interest paid =$95,500

Computation:

Cash flow to creditors = Interest paid - (Long-term debt ending balance - Long-term debt beginning balance)

Cash flow to creditors = $95,500 - ($1,610,000 - $1,4150,000) Cash flow to creditors = -$99,500