1) Reporting Issuance and Retirement of Long-Term Debt On the basis of the detai
ID: 2600022 • Letter: 1
Question
1) Reporting Issuance and Retirement of Long-Term Debt
On the basis of the details of the following bonds payable and related discount accounts, indicate the items to be reported in the Financing Activities section of the statement of cash flows, assuming no gain or loss on retiring the bonds:
2) Reporting Stockholders' Equity Items on Statement of Cash Flows
On the basis of the following stockholders' equity accounts, indicate the items, exclusive of net income, to be reported on the statement of cash flows. There were no unpaid dividends at either the beginning or the end of the year.
If an amount is not reported on the statement of cash flows, enter in "0" in the Amount column.
3) Veteran Corporation purchased land for $394,000. Later in the year, the company sold a different piece of land with a book value of $193,000 for $218,000.
How are the effects of these transactions reported on the statement of cash flows assuming the indirect method is used? Use the minus sign to indicate cash out flows, cash payments, decreases in cash and for any adjustments, if required. If a transaction has no effect on the statement of cash flows, select "No effect" from the drop down menu and leave the amount box blank.
ACCOUNT Bonds Payable ACCOUNT NO. Balance Date Item Debit Credit Debit Credit Jan. 1 Balance 560,000 Jan. 2 Retire bonds 112,000 448,000 June 30 Issue bonds 336,000 784,000Explanation / Answer
1) Item Section of Statement of Cash Flows Added or Deducted Amount Retire bonds (112000-8960) Financing Activities Deducted $ 103,040 Issue bonds (336000-22500) Financing Activities Added $ 313,500 Amortization of discount Not applicable; has no cash effect. $ - 2) Item Section of Statement of Cash Flows Added or Deducted Amount Sale of common stock (175000+288750) Financing Activities Added $ 463,750 Cash dividend Financing Activities Deducted $ 66,800 Stock dividend Not applicable; has no cash effect. $ - 3) Transactions Action Amount Gain or loss on sale of land No effect $ - Cash received from sale of land Investing Activities $ 218,000 Cash paid for purchase of land Investing Activities $ (394,000)
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