Exercise 12-3 Retirement of Bonds Payable on the Statement of Cash Flows-Indirect Method LO3 Redstone Inc. has the following debt outstanding on December 31, 2017: 10% bonds payable, due 12/31/21 Discount on bonds payable $500,000 (40,000) $460,000 On this date, Redstone retired the entire bond issue by paying cash of $510,000. Required 1. Identify and analyze the transaction to record the bond retirement. 2. Describe how the bond retirement would be reported on the statement of cash flows assum- ing that Redstone uses the indirect method.

Question
Exercise 12-3 Retirement of Bonds Payable on the Statement of Cash
Flows-Indirect Method
LO3
Redstone Inc. has the following debt outstanding on December 31, 2017:
10% bonds payable, due 12/31/21
Discount on bonds payable
$500,000
(40,000)
$460,000
On this date, Redstone retired the entire bond issue by paying cash of $510,000.
Required
1. Identify and analyze the transaction to record the bond retirement.
2. Describe how the bond retirement would be reported on the statement of cash flows assum-
ing that Redstone uses the indirect method.
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Transcribed Image Text

Exercise 12-3 Retirement of Bonds Payable on the Statement of Cash Flows-Indirect Method LO3 Redstone Inc. has the following debt outstanding on December 31, 2017: 10% bonds payable, due 12/31/21 Discount on bonds payable $500,000 (40,000) $460,000 On this date, Redstone retired the entire bond issue by paying cash of $510,000. Required 1. Identify and analyze the transaction to record the bond retirement. 2. Describe how the bond retirement would be reported on the statement of cash flows assum- ing that Redstone uses the indirect method.

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