Problem:
If $120,000 of bonds is issued during the year but $200,000 of old bonds are retired during the year, the statement of cash flows will show what impact/line item(s) in the financing activities section?
- Net increase in cash of $80,000
- Net decrease in cash of $80,000
- Increase in cash of $120,000 and a decrease in cash of $200,000
- Net loss on retirement of bonds of $80,000
Note: Provide support for your rationale.