Eastern Corp ​
Additional Information ​
(1) Equipment with a Cost Of

question 33

Essay

Eastern Corp.
Use the following selected data and additional information from the records of Eastern Corp.to answer the questions that follow.
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$\begin{array}{lrr}\text { Bal ance Sheet Data } & \underline{\mathbf{2 0 1 8}} & \underline{\mathbf{2 0 1 7}} \\\hline \text { Accounts receivable } & \$ 36,000 & \$ 42,000 \\\text { Inventories } & 28,000 & 25,000 \\\text { Accounts payable } & 31,000 & 35,000 \\\text { Salaries payable } & 2,000 & 1,000 \\\text { Equipment } & 60,000 & 40,000 \\\text { Accumulated depreciation } & 12,000 & 16,000 \\\text { Bonds payable } & 50,000 & 100,000 \\\text { Common stock } & 150,000 & 100,000 \\\text { Retained eamings } & 38,000 & 20,000\end{array}$ ​
Additional information:
$\begin{array}{lr}\text { Income Statement Data } & \mathbf{2 0 1 8} \\\hline \text { Net sales } & \$ 420,000 \\\text { Cost of goods sold } & 300,000 \\\text { Operating expenses (excluding depreciation expense) } & 84,000 \\\text { Net income } & 30,000 \\\text { Gain on sale of equipment (included in net income above) } & 2,000\end{array}$ ​
(1) Equipment with a cost of $\$ 15,000$ and a book value of $\$ 3,000$ was sold for $\$ 5,000$ during 2018 .
(2) Common stock was issued to retire bonds payable during 2018 .
(3) The only items affecting retained eamings in 2018 were net income and dividends declared and paid. ​
-Review the data for Eastern Corp.
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Required
(A)What amount was paid to retire bonds payable during 2018?
(B)How would the transaction to retire bonds by issuing common stock be reported on the statement of cash flows for 2018 for Eastern Corp.?

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Definitions:

Semi-strong-form Efficient

Semi-strong-form efficiency is a class of market efficiency that posits that all public information is already reflected in stock prices, making it impossible to consistently achieve higher returns by trading on that information.

Historical Prices

The past trading prices of a security or commodity, often analyzed to identify trends and patterns for future trading decisions.

Variance

A statistical measure of the dispersion of data points in a data set around the mean, indicating the volatility and risk associated with a particular asset or investment.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the values in a data set differ from the mean of the data set.