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:

Answer 1

$70,200

Step-by-step explanation:

Basically there are three types of activities:

1. Operating activities: It includes those transactions which affect the working capital, and it records transactions of cash receipts and cash payments.

2. Investing activities: It records those activities which include purchase and sale of the fixed assets

3. Financing activities: It records those activities which affect the long term liability and shareholder equity balance

It records only cash receipts and cash payments. So, only $70,200 would be reported under cash flows from financing activities

All other information which is given is not relevant. Hence, ignored it