Asked by Marinda Carraway on Jun 29, 2024
Verified
If $475,000 of bonds payable are sold at 101, $475,000 would be reported in the Cash flows from financing activities section of the statement of cash flows.
Bonds Payable
Long-term liabilities on a company's balance sheet, representing money owed to bondholders that must be repaid at a future date.
Cash Flows
The total amount of money being transferred into and out of a business, especially affecting liquidity.
- Accurately pinpoint and sort cash inflows and outflows to their fitting sections within the cash flow statement.
Verified Answer
FT
Filiana TanotoJul 02, 2024
Final Answer :
False
Explanation :
When bonds are sold at a premium (in this case, 101% of their face value), the cash received is more than the face value of the bonds. Therefore, $479,750 (475,000 * 1.01) would be reported in the Cash flows from financing activities section, not $475,000.
Learning Objectives
- Accurately pinpoint and sort cash inflows and outflows to their fitting sections within the cash flow statement.
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