Question

A company reported that its bonds with a par value of $50,000 and a carrying value of $65,500 are retired for $70,200 cash, resulting in a loss of $4,700. The amount to be reported under cash flows from financing activities is: Multiple Choice $(65,500). $(70,200). $15,500. $(4,700). $(15,500).

Answer 1

$(70,200).

Step-by-step explanation:

Statement of cash flows is a financial statement that shows cash movement in a business, and it is classified as operating cash flow, investing cash flow, and financing cash flow.

Cash flow from financing activity is defined as cash from transactions that affect long term liabilities and equity. They are transactions that involves funding of the companie's operations or expansion.

The companie's bonds in this case are retired for $70,200 resulting in a decrease in cash for financing activity.

Note Cash flows only involves cash movement during transactions. That is amount spent or received.