If $380,000 of bonds are issued during the year and $130,000 of bonds are retired during the year,the statement of cash flows (indirect method)will show a(n):
A)net gain on retirement of bonds of $250,000 in the financing activities section.
B)increase in cash of $380,000 in the financing activities section and a decrease in cash of $130,000 in the financing activities section.
C)net increase in cash of $250,000 in the operating activities section.
D)net decrease in cash of $250,000 in the operating activities section.

Question

Quizplus · Accepted Answer

When bonds are issued, it results in an increase in cash in the financing activities section. Therefore, the statement of cash flows will show an increase of $380,000 in the financing activities section. When bonds are retired, it results in a decrease in cash in the financing activities section. Therefore, the statement of cash flows will show a decrease of $130,000 in the financing activities section. There will be no net gain or net decrease in cash of $250,000 in the operating activities section.

If $380,000 of Bonds Are Issued During the Year and $130,000