The following information was drawn from Eckerd Company's balance sheets at the end of Year 2 and Year 1. $\begin{array}{lrr}
&\text { Year } 2&\text { Year } 1\
\text {Bonds payable } &\$170,000&\$150,000\
\end{array}$
New bonds in the amount of $50,000 were issued at par during Year 2.What is the amount of cash flow associated with the repayment of bond liabilities?
A) $120,000
B) $150,000
C) $30,000
D) Cannot be determined

Question

The following information was drawn from Eckerd Company's balance sheets at the end of Year 2 and Year 1. $\begin{array}{lrr}
&\text { Year } 2&\text { Year } 1\
 \text {Bonds payable } &\$170,000&\$150,000\
\end{array}$
 New bonds in the amount of $50,000 were issued at par during Year 2.What is the amount of cash flow associated with the repayment of bond liabilities?
A) $120,000
B) $150,000
C) $30,000
D) Cannot be determined

Quizplus · Accepted Answer

The amount of bond liabilities in Year 1 was $500,000, and in Year 2 it was $550,000 ($500,000 + $50,000 new bond issue). Therefore, the increase in bond liabilities during Year 2 was $50,000 ($550,000 - $500,000). The amount of cash flow associated with the repayment of bond liabilities is the difference between the increase in bond liabilities and the amount of new bond issue, which is $50,000 - $20,000 = $30,000. Therefore, the answer is C.

The Following Information Was Drawn from Eckerd Company's Balance Sheets Year 2 Year 1Bonds payable $170,000$150,000\begin{array}{lrr}&\text { Year } 2&\text { Year } 1\\ \text {Bonds payable } &\$170,000&\$150,000\\\end{array}Bonds payable ​ Year 2$170,000​ Year 1$150,000​

The Following Information Was Drawn from Eckerd Company's Balance Sheets $\begin{array}{lrr}&\text { Year } 2&\text { Year } 1\\ \text {Bonds payable } &\$170,000&\$150,000\\\end{array}$