A company reported that its bonds with a par value of 50000

A company reported that its bonds with a par value of $50,000 and a carrying value of $58,000 are retired for $61,200 cash, resulting in a loss of $3,200. The amount to be reported under cash flows from financing activities is:

$(58,000).

Zero. This is an investing activity.

Zero. This is an operating activity.

$(61,200).

$(3,200

Solution

Solution: The correct answer is $61,200. But the bracekts must be taken off as because this is related to an inflow and not an outflow.

The $3,200 loss must be added back to net income to arrive at cash from operating activities, and the $61,200 cash inflow is to be reported under financing activities.