The December 31, 2015, balance sheet of Schism, Inc., showed long-term debt of $1,405,000, and the December 31, 2016, balance sheet showed long-term debt of $1,590,000. The 2016 income statement showed an interest expense of $94,500. What was the firm's cash flow to creditors during 2016?

($90,500)

Explanation:

The Cashflow to Creditors helps a company identify just how much cash was paid to creditors in a period.

The formula is,

Cash flow to creditors = Interest paid – (long term debt at the end – long term date at the beginning)

The ending balance in 2015 which will be the opening balance in 2016 is $1,405,000.

The Ending balance in 2016 is $1,590,000.

The Cash Flow to Creditors is therefore,

Cash flow to creditors during 2016 = 94,500 - ( 1,590,000 - 1,405,000)

= - $90,500

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