Below Is Information for Dakota Corp At the End of 2018,Dakota Issued Bonds at Par Value

question 69

Multiple Choice

Below is information for Dakota Corp.for 2017 and 2018: $\begin{array}{lr}\text { Bonds payable, December } 31,2017 & \$ 500,000 \\\text { Bonds payable, December } 31,2018 & 800,000 \\\text { Loss on bond retirement-2018 } & 15,000 \\\text { Interest expense on bonds-2018 } & 45,000\end{array}$ At the end of 2018,Dakota issued bonds at par value for $800,000 cash.The proceeds from these bonds were used to retire the $500,000 bond issue outstanding at the end of 2018 (before their maturity date) .All interest expense was paid in cash during 2018.
The following statements describe how Dakota reported the cash flow effects of the items described above on its 2018 statement of cash flows.The indirect method is used to prepare the Operating Activities section.Which of the following has been reported incorrectly by Dakota?

• A)Proceeds of $800,000 from the issuance of bonds were reported as a cash inflow in the Financing Activities section.
• B)The loss on bond retirement of $15,000 was added to net income in the Operating Activities section.
• C)Payments of $500,000 for the bond retirement were reported as a cash outflow in the Investing Activities section.
• D)Interest expense of $45,000 was not reported separately because it is included in net income in the Operating Activities section.

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