A company reported that its bonds with a par value of $50,000 and a carrying value of $61,500 are retired for $65,400 cash, resulting in a loss of $3,900.

The amount to be reported under cash flows from financing activities is:

a.$(3.900).

b.$11.500

c.$(65,400)

d.$(61.500),

e.$(11500)

Question

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aquialaska aquialaska · Answer 1 · 2020-04-05T05:23:58+02:00

Answer:

The correct answer is option (C).

Explanation:

According to the scenario, the given data are as follows:

Bonds par value = $50,000

Bonds carrying value = $61,500

Retired for cash (outflow) = $65,400

Loss= $3,900

So, we can calculate the amount by taking following in consideration:

There mainly two process in Cash flow, i.e. Inflow and outflow

So, Retired or repayment for bonds = Financing Activities

So, Financing Activities = $(65,400) ( out flow)