If $475,000 of bonds payable are sold at 101, $475,000 would be reported in the Cash flows from financing activities section of the statement of cash flows.

Question

Quizplus · Accepted Answer

When bonds are sold at a premium (in this case, 101% of their face value), the cash received is more than the face value of the bonds. Therefore, $479,750 (475,000 * 1.01) would be reported in the Cash flows from financing activities section, not $475,000.

If $475,000 of Bonds Payable Are Sold at 101, $475,000