A company reported that its bonds with a par value of $50,000 and a carrying value of $62,000 are retired for $66,000 cash, resulting in a loss of $4,000. The amount to be reported under cash flows from financing activities is: Multiple Choice $12,000. $ (12,000). $ (62,000). $ (66,000). $ (4,000).

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Business

Natalia Rollins

2 February, 06:49

A company reported that its bonds with a par value of $50,000 and a carrying value of $62,000 are retired for $66,000 cash, resulting in a loss of $4,000. The amount to be reported under cash flows from financing activities is: Multiple Choice $12,000. $ (12,000). $ (62,000). $ (66,000). $ (4,000).

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Irvin Watson · Answer 1

($66,000)

Explanation:

Financing activities: It measures those transactions which are related to the long term liabilities and stockholder equity. The issuance of shares is an inflow of cash whereas redemption, the retirement of bond and dividend paid is a cash outflow in which the cash balance is reduced.

Since in the given question, the bond is retired for $66,000 cash which represents the cash outflow for $66,000 only as it includes the transaction of cash