Alice issued $50,000 of 4%, 5-year term bonds on 12-31-18 when the market rate for similar bonds was 5%. The bonds were dated 12-31-18 with interest payable June 30 and December 31. Upon issuing the bonds, Alice incurred and paid $900 of bond issuance costs.

Alice issued $100,000 of 4%, 3-year callable term bonds on 12-31-19 when the market rate for similar bonds was 5%. The bonds were dated 12-31-19 with interest payable June 30 and December 31. Upon issuing the bonds, Alice incurred and paid $7,000 of bond issuance costs. Alice can call in, i.e., retire, some or all of the bonds any time after 01-01-21 at 101 plus interest. Alice uses the effective interest method to amortize any bond discount or premium. On 9-01-21, Alice called in $50,000 of the bonds. 

What amount of the bonds should be reported on the statement of cash flows?

Answer rating: 100% (QA)

Step 1 The effect of bond on the cash flow statement is as follows a Issue of bo... View the full answer