Question
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
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:
| ACCOUNT Bonds Payable | ACCOUNT NO. | |||||||||||
| Balance | ||||||||||||
| Date | Item | Debit | Credit | Debit | Credit | |||||||
| Jan. | 1 | Balance | 550,000 | |||||||||
| Jan. | 2 | Retire bonds | 110,000 | 440,000 | ||||||||
| June | 30 | Issue bonds | 330,000 | 770,000 | ||||||||
| ACCOUNT Discount on Bond Payable | ACCOUNT NO. | |||||||||||
| Balance | ||||||||||||
| Date | Item | Debit | Credit | Debit | Credit | |||||||
| Jan. | 1 | Balance | 24,750 | |||||||||
| Jan. | 2 | Retire bonds | 8,800 | 15,950 | ||||||||
| June | 30 | Issue bonds | 22,100 | 38,050 | ||||||||
| Dec. | 31 | Amortize discount | 1,900 | 36,150 | ||||||||
| Item | Section of Statement of Cash Flows | Added or Deducted | Amount |
| Retire bonds | Financing activities section | Deducted | $fill in the blank 3 |
| Issue bonds | Financing activities section | Added | $fill in the blank 6 |
| Amortization of discount | Operating activities section, if indirect method used | Added | $fill in the blank 9 |
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Auditing Cases An Interactive Learning Approach
Authors: Steven M Glover, Douglas F Prawitt
4th Edition
0132423502, 978-0132423502
