J. M. Smucker Company has many brands including Smucker’s, Jif, Pillsbury, Hungry Jack, and Crisco. In fiscal 2011, the company reported interest expense of $69,594,000 on its income statement. Footnote K showed a cash payment for interest of $62,075,000. Suppose that accrued interest, a current liability on the balance sheet, was $8,105,000 at the beginning of fiscal 2011.
1. Describe how the transactions relating to interest would be shown in the body of the statement of cash flows if J. M. Smucker Company used the direct method for reporting cash flows from operating activities. Be specific, including amounts shown.
2. Describe how J. M. Smucker would show the transactions relating to interest on a supplementary schedule that reconciles net income and net cash provided by operating activities.