Question

If $251000 of bonds are issued during the year but $131000 of old bonds are retired...

If $251000 of bonds are issued during the year but $131000 of old bonds are retired during the year, the statement of cash flows will show a(n)

a. increase in cash of $251000 and a decrease in cash of $131000.

b. net decrease in cash of $120000.

c. net increase in cash of $120000.

d. net gain on retirement of bonds of $120000.

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Homework Answers

Answer #1

Cash receipts from issue of bonds = $251,000

Cash payment for retirement of bonds = $131,000

In the statement of cash flow, both the Cash receipts from issue of bonds and Cash payment for retirement of bonds will be recorded.

Correct option is a.

In the statement of cash flow, all cash transactions are shown separately. Hence, net increase in cash of $120,000 will not be shown on the statement of cash flow.

Kindly comment if you need further assistance. Thanks!!

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