In March 2012, Yoshiro Inc.. decided to retire an outstanding bond issue before maturity. The coupon rate on the bond issue was 5%. The bond was issued in 2011 at an effective interest rate of 6%. On the day Yoshiro retired the bond issue, the market interest rate was 4%.
Which of the following items would be decreased by the bond retirement transaction? (check all that apply)
Net Income
Cash from Investing Activities
Cash from Operating Activities
Cash from Financing Activities
Total Liabilities
Solution
Cash from Investing activities - Since there is an outflow of cash
Total liabilities reduces - since the bonds payable account is zeroed out
.
Introduction to ArtificiaI Intelligence in Higher Education
In March 2012- Yoshiro Inc-- decided to retire an outstanding bond iss.docx
1. In March 2012, Yoshiro Inc.. decided to retire an outstanding bond issue before maturity. The
coupon rate on the bond issue was 5%. The bond was issued in 2011 at an effective interest rate
of 6%. On the day Yoshiro retired the bond issue, the market interest rate was 4%.
Which of the following items would be decreased by the bond retirement transaction? (check all
that apply)
Net Income
Cash from Investing Activities
Cash from Operating Activities
Cash from Financing Activities
Total Liabilities
Solution
Cash from Investing activities - Since there is an outflow of cash
Total liabilities reduces - since the bonds payable account is zeroed out
