David Corporation issued $100,000,5-year bonds at 97 on January 1,2008.On December 31,2018 the bonds matured.The payment of the bonds at maturity would be reported on the statement of cash flows as a cash outflow of:

Question

Quizplus · Accepted Answer

The payment of the bond at maturity is a repayment of the principal amount borrowed, which is $100,000 in this case. Therefore, it would be reported as a cash outflow in the financing activities section, as it represents the repayment of a liability. Option A is incorrect as it only represents the amount the bonds were issued for, not the amount that needs to be repaid at maturity. Option B is incorrect as investing activities involve the acquisition or disposal of long-term assets, which is not applicable in this scenario. Option D is incorrect for the same reason as option B.

David Corporation Issued $100,000,5-Year Bonds at 97 on January 1,2008