Pella Company issued bonds with a face value of $5,600,000 on January 1, 2014. The bonds were issued at face value and carried a 4-year term to maturity. Interest at 8% was payable in cash on December 31 of each year. Based on this information alone, the amount of interest expense shown on the 2014 income statement and the cash flow from operating activities shown on the 2014 statement of cash flows would be:

 

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A) ABCD B) C) Interest Expense Cash Outflow zero zero zero $ 400,000 400,000 zero 400,000 400,000 $ LA LA $ Choice A Choice B O Choice D Choice C A) ABCD B) C) Interest Expense Cash Outflow zero zero zero $ 400,000 400,000 zero 400,000 400,000 $ LA LA $ Choice A Choice B O Choice D Choice C

Answer rating: 100% (QA)

C Choice D The amount of interest expe... View the full answer