Company purchased equipment on July 1, 2010, and gave a

five-month,

9% note with a face value of $40,000.

How much interest expense will be recognized on the income statement for the year ended December 31, 2010? __________

part 2 What effect does the repayment of the note plus interest have on the statement of cash flows for 2010? (Round the interest expense to the nearest dollar.)

Question content area bottom

Part 1

How much interest expense will be recognized on the income statement for the year ended December 31, 2010?

$18001800

Part 2

What effect does the repayment of the note plus interest have on the statement of cash flows for 2010?

If the note and interest have been repaid (very likely since it was a

five-month

note), the cash for interest paid would be (which One)

a financing

an investing

an operating

cash flow.

The cash to repay the principal of the note will be (Which one)

a financing

an investing

an operating

cash flow.