Reporting Issuance and Retirement of Long-Term Debt On the basis of the details

Question

Reporting 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 2016 Jan.1 Jan. 2 Retire bonds une 30 Issue bonds Item Debit Credit Debit Credit anlance 750,000 600,000 1,050,000 150,000 450,000 ACCOUNT Discount on Bonds Payable ACCOUNT NO. Balance Date Debit Item Debit Credit Credit 2016 1Balance an. Retire bonds une 30 Issue bonds Dec.31 Amortize discount 33,750 21,750 51,750 2,625 49,125 12000 21.750 30,000

Explanation / Answer

Cash flow from financing activities: Cash paid to retire bonds 30000 =150000-120000 Cash proceeds from bonds issuance 420000 =450000-30000 Net Cash flow from financing activities 450000

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