Bonds Payable on the balance sheet of Michael LLC includes one series of bonds initially issued at a premium. The entry made in the accounting records for interest expense during the period was as follows: Interest Expense . . . . . . . . . . . . . . . . .4,500 Premium on Bonds Payable . . . . . . . . . . 500 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 The firm spent
$5,000 of cash even though it subtracted only $4,500 of interest expense in computing net income. In preparing the statement of cash flows using the T-account work sheet
a. subtract an additional $5,000 from net income to derive cash flow from operations.
b. subtract an additional $4,500 from net income to derive cash flow from operations.
c. subtract an additional $500 from net income to derive cash flow from operations.
d. add an additional $500 from net income to derive cash flow from operations.
e. add an additional $4,500 from net income to derive cash flow from operations.
C
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Fill in the blank(s) with the appropriate word(s).