If $250,000 of bonds are issued during the year but $100,000 of old bonds are retired during the year, the statement of cash flows will show a(n)
A) net increase in cash of $150,000.
B) net decrease in cash of $150,000.
C) increase in cash of $250,000 and a decrease in cash of $100,000.
D) net gain on retirement of bonds of $150,000.

Question

Quizplus · Accepted Answer

Issuing $250,000 of bonds results in an increase in cash flow, while retiring $100,000 of old bonds results in a decrease in cash flow. Therefore, the statement of cash flows will show a net increase in cash flow of $150,000 ($250,000 - $100,000 = $150,000).

If $250,000 of Bonds Are Issued During the Year but $100,000