Presenting Bond Payable on Statement of Cash Flows Yale Corporation issued a 6%, $120,000 5-year bond dated January 1, with interest payable annually on December 31. The bond was sold to yield 8% interest. Assume that the company uses the effective interest method to amortize bond discounts or premiums. a. Provide journal entries to be made on January 1 and December 31 of this first year. • Note: If a journal entry isn't required on any of the dates shown, select "N/A-debit" and "N/A-credit" as the account names and leave the Dr. and Cr. answers blank (zero). Date Jan. 1 Account Name Cash Bonds Payable Discount on Bonds Payable To record issuance of bond. Dec. 31 Interest Expense Discount on Bonds Payable Interest Payable To record payment of interest. Dr. 125,195 0 9,580 125,195 0 0 Cr. 0x 0x 0x 0x 0x 0x
Presenting Bond Payable on Statement of Cash Flows Yale Corporation issued a 6%, $120,000 5-year bond dated January 1, with interest payable annually on December 31. The bond was sold to yield 8% interest. Assume that the company uses the effective interest method to amortize bond discounts or premiums. a. Provide journal entries to be made on January 1 and December 31 of this first year. • Note: If a journal entry isn't required on any of the dates shown, select "N/A-debit" and "N/A-credit" as the account names and leave the Dr. and Cr. answers blank (zero). Date Jan. 1 Account Name Cash Bonds Payable Discount on Bonds Payable To record issuance of bond. Dec. 31 Interest Expense Discount on Bonds Payable Interest Payable To record payment of interest. Dr. 125,195 0 9,580 125,195 0 0 Cr. 0x 0x 0x 0x 0x 0x
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Presenting Bond Payable on Statement of Cash Flows
Yale Corporation issued a 6%, $120,000 5-year bond dated January 1, with interest payable annually on December 31. The bond was sold to yield 8% interest. Assume that the company uses the effective interest method to amortize bond discounts or
premiums.
a. Provide journal entries to be made on January 1 and December 31 of this first year.
• Note: If a journal entry isn't required on any of the dates shown, select "N/A-debit" and "N/A-credit" as the account names and leave the Dr. and Cr. answers blank (zero).
Date
Jan. 1
Dec. 31
Account Name
Cash
Bonds Payable
Discount on Bonds Payable
To record issuance of bond.
Interest Expense
Discount on Bonds Payable
Interest Payable
To record payment of interest.
Dr.
125,195
0
9,580
125,195
0
0
Cr.
0x
0x
0x
0x
0x
0x
b. Indicate the impact of this transaction on the operating, investing, and financing sections of the current year statement of cash flows. The indirect method is used to report cash flows from operating activities.
• Note: Indicate a subtraction in the cash flow statement with a negative sign in the Amount column.
• Note: If an item is not included in the cash flow statement, enter zero (leave blank) in the Amount column, and enter "N/A" in the Cash Flow Section column.
Amount
Cash Flow Section
Item
Amortization of discount on bonds payable $
Proceeds from bond issuance
125,195 * Operating activities section
$
125,195 x Financing activities section
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