Response to the following questions:
1. A long-term investment in bonds with a cost of $75,000 was sold for $80,000 cash.
(a) What was the gain or loss on the sale?
(b) What was the effect of the transaction on cash flows?
(c) How should the transaction be reported in the statement of cash flows if cash flows from operating activities are reported by the indirect method?
2. A corporation issued $5,000,000 of 20-year bonds for cash at 105. How would the transaction be reported on the statement of cash flows?