Question

eporting Issuance and Retirement of Long-Term Debt On the basis of the details of the following...

eporting Issuance and Retirement of Long-Term Debt

On the basis of the details of the following bonds payable and related discount accounts, indicate the items to be reported in the Financing Activities section of the statement of cash flows, assuming no gain or loss on retiring the bonds:

ACCOUNT Bonds Payable ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
Jan. 1 Balance 750,000
2 Retire bonds 150,000 600,000
June 30 Issue bonds 450,000 1,050,000
ACCOUNT Discount on Bonds Payable ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
Jan. 1 Balance 33,750
2 Retire bonds 12,000 21,750
June 30 Issue bonds 30,000 51,750
Dec. 31 Amortize discount 2,625 49,125
Item Section of Statement of Cash Flows Added or Deducted Amount
Retire bonds $
Issue bonds $
Amortization of discount $

Homework Answers

Answer #1
  • Requirement asked

Item

Section of Statement of Cash Flows

Added or Deducted

Amount

Retire bonds

Cash (out)flow from Financing activities

Deducted ($150000 - 12000)

$138,000

Issue bonds

Cash (in)flow from Financing activities

Added ($450000 - 30000)

$420,000

Amortization of discount

Cash flows from Operating activities (if indirect method is used) ^See alternative solution

Added

$2,625

Item

Section of Statement of Cash Flows

Added or Deducted

Amount

Retire bonds

Cash (out)flow from Financing activities

Deducted ($150000 - 12000)

$138,000

Issue bonds

Cash (in)flow from Financing activities

Added ($450000 - 30000)

$420,000

Amortization of discount

NA [non cash activity]

NA

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