On 12/31/18, Wise Corporation makes the final entry to record interest and amortization. Immediately after that, Wise pays off the bonds as scheduled. Which of the following answers shows the effect of the bond pay-off on the financial statements?

Question

Quizplus · Accepted Answer

Once the final amortization has been recorded, the carrying value of the bond liability is equal to the face value, $17,500. The payment to retire the bonds decreases assets (cash) and decreases liabilities (bonds payable). It is reported as a cash outflow for financing activities.

On 12/31/18, Wise Corporation Makes the Final Entry to Record