Reporting Issuance and Retirement of Long-Term DebtOn 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 PayableACCOUNT NO.BalanceDateItemDebitCreditDebitCreditJan.1Balance750,0002Retire bonds150,000600,000June30Issue bonds450,0001,050,000ACCOUNT Discount on Bonds PayableACCOUNT NO.BalanceDateItemDebitCreditDebitCreditJan.1Balance33,7502Retire bonds12,00021,750June30Issue bonds30,00051,750Dec.31Amortize discount2,62549,125ItemSection of Statement of Cash FlowsAdded or DeductedAmountRetire bondsIssue bondsAmortization of discount

Statement of cash flows: This statement reports all the cash transactions which are responsible for…

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:

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:

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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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
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

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