Jones Company issued bonds with a $150,000 face value on January 1, 2016. The fi
ID: 2538237 • Letter: J
Question
Jones Company issued bonds with a $150,000 face value on January 1, 2016. The five-year term bonds were issued at 99 and had a 8.00% stated rate of interest that is payable in cash on December 31st of each year. Jones amortizes the bond discount using the straight-line method. Based on this information:
The amount of cash outflow from operating activities shown on Jones's December 31, 2017 statement of cash flows would be:
$12,000.
$12,300.
$11,700.
$12,600.
Jones Company issued bonds with a $150,000 face value on January 1, 2016. The five-year term bonds were issued at 99 and had a 8.00% stated rate of interest that is payable in cash on December 31st of each year. Jones amortizes the bond discount using the straight-line method. Based on this information:
The amount of cash outflow from operating activities shown on Jones's December 31, 2017 statement of cash flows would be:
$12,000.
$12,300.
$11,700.
$12,600.
Explanation / Answer
A. $12,000
The amount of cash outflow from operating activities shown on Jones's December 31, 2017 statement of cash flows would be:
= $150,000 × 0.08
= $12,000
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