If? $420,000 of bonds are issued during the year and? $130,000 of bonds are reti
ID: 2433224 • Letter: I
Question
If? $420,000 of bonds are issued during the year and? $130,000 of bonds are retired during the? year, the statement of cash flows? (indirect method) will show? a(n): A. net decrease in cash of? $290,000 in the operating activities section. B. net gain on retirement of bonds of? $290,000 in the financing activities section. C. increase in cash of? $420,000 in the financing activities section and a decrease in cash of? $130,000 in the financing activities section. D. net increase in cash of? $290,000 in the operating activities section.
Explanation / Answer
Bonds issue and repayment are part of FInancing Activities so far as Statement of Cash flow is concerned. $ 420,000 of bonds issue = Cash Inflow; $ 130,000 Bonds retired = Cash Outflow.
Hence, the correct answer is Option 'C': Increase in Cash of $ 420,000 in FINANCING ACTIVITIES section and a Decrease in Cash of $ 130,000 in the FINANCING ACTIVITIES section.