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

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

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

540,000

Jan.

2

Retire bonds

108,000

432,000

June

30

Issue bonds

324,000

756,000

ACCOUNT Discount on Bond Payable

ACCOUNT NO.

Balance

Date

Item

Debit

Credit

Debit

Credit

Jan.

1

Balance

24,300

Jan.

2

Retire bonds

8,640

15,660

June

30

Issue bonds

21,700

37,360

Dec.

31

Amortize discount

1,870

35,490

Item	Section of Statement of Cash Flows	Added or Deducted	Amount
Retire bonds			$
Issue bonds			$
Amortization of discount			$

business accounting

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Answer 1

Answer #1

Solution

Item	Section of Statement of Cash Flows	Added or Deducted	Amount
Item	Section of Statement of Cash Flows	Added or Deducted	Amount	Retire bonds	Financing activities section	Deducted	$ 99,360.00
Issue bonds	Financing activities section	Added	$302,300.00
Amortization of discount	Operating activities section	Added	$ 1,870.00

Since there is no gain or loss on retirement of bonds net cash paid would be face value minus discount on bonds unamortized.

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Answer 2

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