Jones Company Issued Bonds with a $200,000 Face Value on January

question 17

Multiple Choice

Jones Company issued bonds with a $200,000 face value on January 1, Year 1. The five-year term bonds were issued at 97 and had a 7½% stated rate of interest that is payable in cash on December 31^st of each year. Jones amortizes the bond discount using the straight-line method. Based on this information:The amount of cash outflow from operating activities shown on Jones's December 31, Year 2 statement of cash flows would be:

• A) $15,000.
• B) $16,200.
• C) $13,800.
• D) $17,400.

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Definitions:

Property, Plant, and Equipment

Tangible assets used in the operation of a business, expected to provide benefits for more than one period, such as buildings and machinery.

Income Statement

A financial statement that shows a company's revenues and expenses over a specified period, resulting in net profit or loss.

Balance Sheet

A financial summary showing a company's assets, liabilities, and equity from shareholders at a designated time.

Prepared

The state of being ready for a specific event, action, or process, often involving prior planning or setup.