During Year 3, Investors in Bonds of Kline Corporation Exercised

Multiple Choice

During Year 3, investors in bonds of Kline Corporation exercised their option to convert their debt securities into shares of common stock.The entry made in the accounting records to record the conversion is as follows:
Bonds Payable ...................................3,000
Common Stock ....................................1,000
Additional Paid-in Capital ............................2,000
The transaction requires

A) inclusion in the statement of cash flows as an operating activity, only.
B) inclusion in the statement of cash flows as an investing activity, only.
C) inclusion in the statement of cash flows as a financing activity, only.
D) disclosure in a supplementary schedule or notes to the financial statements.
E) disclosure in managements' discussion and analysis.