Question

Fara Co. reported bonds payable of $47,000 at December 31, Year 1, and $50,000 at December 31, Year 2.During Year 2, Fara issued $20,000 of bonds payable in exchange for equipment. There was no amortizationof bond premium or discount during the year. What amount should Fara report in its Year 2 statement of cashflows for redemption of bonds payable?a. $3,000b. $17,000c. $20,000d. $23,000

Answer 1

option b) $ 17,000

Step-by-step explanation:

Given data:

Payable bonds at December 31, year 1 = $ 47,000

Payable bonds at December 31, year 2 = $ 50,000

Issued bonds in year 2 = $ 20,000

Now,

the redemption of bonds payable in the year 2 will be = $ 47000 + $ 20000 - $ 50000

or

the redemption of bonds payable in the year 2 will be = $ 17000

hence, the correct answer is option b) $ 17,000