Fara Co. reported bonds payable of $47,000 at December 31, Year 1, and $50,000 at December 31, Year 2. During Year 2, Fara issued $20,000 of bonds payable in exchange for equipment. There was no amortizationof bond premium or discount during the year. What amount should Fara report in its Year 2 statement of cashflows for redemption of bonds payable? a. $3,000b. $17,000c. $20,000d. $23,000

Question

Milagros Potter

Business

5 July, 14:26

Fara Co. reported bonds payable of $47,000 at December 31, Year 1, and $50,000 at December 31, Year 2. During Year 2, Fara issued $20,000 of bonds payable in exchange for equipment. There was no amortizationof bond premium or discount during the year. What amount should Fara report in its Year 2 statement of cashflows for redemption of bonds payable? a. $3,000b. $17,000c. $20,000d. $23,000

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Answers (1)

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Mila · Answer 1

option b) $ 17,000

Explanation:

Given dа ta:

Payable bonds at December 31, year 1 = $ 47,000

Payable bonds at December 31, year 2 = $ 50,000

Issued bonds in year 2 = $ 20,000

Now,

the redemption of bonds payable in the year 2 will be = $ 47000 + $ 20000 - $ 50000

or

the redemption of bonds payable in the year 2 will be = $ 17000

hence, the correct answer is option b) $ 17,000