Retirement of Bonds Payable on the Statement of Cash Flows—Indirect Method Redstone Inc. has the following debt outstanding on December 31, 2008:

On this date, Redstone retired the entire bond issue by paying cash of $510,000.
Required 1. Prepare the journal entry to record the bond retirement.
2. Describe how the bond retirement would be reported on the statement of cash flows assuming that Redstone uses the indirect method.

Transcribed Image Text:

10% bonds payable, due 12/31/12 $500,000 Discount on bonds payable (40,000) $460,000