Effect of borrowing and interest on statement of cash flows Gillette borrowed $250 mil lion on October 1 by issuing bonds. The debt carries an annual interest rate of 6%, which it must pay on April 1 and October 1 of each year. The debt matures 20 years after its issue date. Gillette's accounting period ends on December 31 of each year. Using the format of Exhibit 5.16, indicate the effects of all these transactions on Gillette's statement of cash flows for the year of issue, when the bonds were outstanding from October 1 through December31.

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Simplified Statoment of Cash Flows (Problem 5.5 for Self-Study) EXHIBIT 5.16 Operations Cash Receipts from Customers Less: Cash Payments to Suppliers, Employees, and Others . Cash Flow from Operations [- (1) – (2)).. Reconciliation of Net Income to Cash Flow from Operations (1) -(2) 51 Net Income (3) Additions to Net Income to Compute Cash Flow from Operations Subtractions from Net Income to Compute Cash Flow from Operations.. Cash Flow from Operations [- (3) + (4) - (5)1. +(4) -(5) 51 Investing Proceeds from Dispositions of "Investing" Assets.. +(6) Cash Used to Acquire "Investing" Assets... -(7) Cash Flow from Investing [- (6) - (7)1 S2 Financing Cash Provided by Increases in Debt or Capital Stock.. +(8) Cash Used to Reduce Debt or Capital Stock. Cash Used for Dividends... Cash Flow from Financing [- (8) - (9) - (10)). Net Change in Cash [- 51 + S2 + 53] Cash, Beginning of the Period.. Cash, End of the Period [- (11) + 54]. -(9) -(10) 53 (11) 54 S5