ACCOUNT Bonds Payable ACCOUNT NO. Balance Debit Credit Debit Credit Date Item Balance Jan. 750,000 600,000 1,050,000 Retire bonds 2 150,000 June 30 Issue bonds 450,000 ACCOUNT Discount on Bonds Payable ACCOUNT NO. Balance Debit Credit Debit Credit Date Item Balance Jan. 33,750 21,750 51,750 Retire bonds 2 12,000 Issue bonds June 30 30,000 31 Amortize discount Dec. 2,625 49,125

ACCOUNT Bonds Payable ACCOUNT NO. Balance Debit Credit Debit Credit Date Item Balance Jan. 750,000 600,000 1,050,000 Retire bonds 2 150,000 June 30 Issue bonds 450,000 ACCOUNT Discount on Bonds Payable ACCOUNT NO. Balance Debit Credit Debit Credit Date Item Balance Jan. 33,750 21,750 51,750 Retire bonds 2 12,000 Issue bonds June 30 30,000 31 Amortize discount Dec. 2,625 49,125

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

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
Debit
Credit
Debit
Credit
Date
Item
Balance
Jan.
750,000
600,000
1,050,000
Retire bonds
2
150,000
June
30
Issue bonds
450,000
ACCOUNT Discount on Bonds Payable
ACCOUNT NO.
Balance
Debit
Credit
Debit
Credit
Date
Item
Balance
Jan.
33,750
21,750
51,750
Retire bonds
2
12,000
Issue bonds
June
30
30,000
31
Amortize discount
Dec.
2,625
49,125

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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