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On the basis of the details of the following bonds payable and related discount accounts, indicate the items to be reported in the "Cash flows from 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 490,000 Retire bonds 98,000 392,000 June 30 Issue bonds 294,000 686,000 ACCOUNT Discount on Bond Payable ACCOUNT NO. Balance Date Item Debit Credit Debit Credit Jan. Balance 22,050 Retire bonds 7,840 14,210 June 30 Issue bonds 19,700 33,910 Dec. 31 Amortize discount 1,700 32,210

On the basis of the details of the following bonds payable and related discount accounts, indicate the items to be reported in the "Cash flows from 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 490,000 Retire bonds 98,000 392,000 June 30 Issue bonds 294,000 686,000 ACCOUNT Discount on Bond Payable ACCOUNT NO. Balance Date Item Debit Credit Debit Credit Jan. Balance 22,050 Retire bonds 7,840 14,210 June 30 Issue bonds 19,700 33,910 Dec. 31 Amortize discount 1,700 32,210

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 "Cash flows from 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. Balance 490,000 Retire bonds 98,000 392,000 June 30 Issue bonds 294,000 686,000 ACCOUNT Discount on Bond Payable ACCOUNT NO. Balance Date Item Debit Credit Debit Credit Jan. Balance 22,050 Retire bonds 7,840 14,210 June 30 Issue bonds 19,700 33,910 Dec. 31 Amortize discount 1,700 32,210 Items Section of Statement of Cash Flows Added or Deducted Amount Retire bonds 98,000 x
Transcribed Image Text: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 "Cash flows from 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. Balance 490,000 Retire bonds 98,000 392,000 June 30 Issue bonds 294,000 686,000 ACCOUNT Discount on Bond Payable ACCOUNT NO. Balance Date Item Debit Credit Debit Credit Jan. Balance 22,050 Retire bonds 7,840 14,210 June 30 Issue bonds 19,700 33,910 Dec. 31 Amortize discount 1,700 32,210 Items Section of Statement of Cash Flows Added or Deducted Amount Retire bonds 98,000 x
Balance Date Item Debit Credit Debit Credit Jan. 1 Balance 22,050 Retire bonds 7,840 14,210 June 30 Issue bonds 19,700 33,910 Dec. 31 Amortize discount 1,700 32,210 Items Section of Statement of Cash Flows Added or Deducted Amount Retire bonds 98,000 x Issue bonds Amortization of discount Feedback Check My Work Recall the journal entries that would be made to retire and ta issue bonds. How do you determine the carrying value of a bond? Keep in mind that many times bonds are issued at a discount or a premium rather than at par. What affect does the discount or premium have on the cash amount received or paid when a bond is issueg or retired? What kind of cash flow activities would these be? Recall the journal entry to record the amortization of a discount. What affect does this transaction have on cash? What affect would this transaction have on the financial statements? Would there need to be an adjustment for the amortization on the statement of cash flows?
Transcribed Image Text:Balance Date Item Debit Credit Debit Credit Jan. 1 Balance 22,050 Retire bonds 7,840 14,210 June 30 Issue bonds 19,700 33,910 Dec. 31 Amortize discount 1,700 32,210 Items Section of Statement of Cash Flows Added or Deducted Amount Retire bonds 98,000 x Issue bonds Amortization of discount Feedback Check My Work Recall the journal entries that would be made to retire and ta issue bonds. How do you determine the carrying value of a bond? Keep in mind that many times bonds are issued at a discount or a premium rather than at par. What affect does the discount or premium have on the cash amount received or paid when a bond is issueg or retired? What kind of cash flow activities would these be? Recall the journal entry to record the amortization of a discount. What affect does this transaction have on cash? What affect would this transaction have on the financial statements? Would there need to be an adjustment for the amortization on the statement of cash flows?
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