Sandusky Company borrowed $13,000 from the Lakeside Bank by issuing a 9% three-year installment note. Sandusky agreed to repay the principal and interest by making annual payments in the amount of $5,135.71.

Based on this information, the amount of the interest expense associated with the second payment would be:

$424.

$2,340.

$1,170.

$813.

On January 1, 2011 Grace Company had an $11,000 balance in the Accounts Receivable account and a zero balance in the Allowance for Doubtful Accounts account. During 2011, Grace provided $53,000 of service on account. The company collected $48,060 cash from account receivable. Uncollectible accounts are estimated to be 8% of sales on account.

Based on this information, the amount of cash flow from operating activities that would appear on the 2011 statement of cash flows is:

$48,060.

$41,845.

$53,000.

$52,700

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