What does it mean : bond were retired?

It means they paid them off. The $180,000 is in your bonds payable and it has to come out.

But there's too little information here. They don't necessarily retire them at $180,000. You need to know how much they retired them for, and you need to know the current carrying value. The difference between the carrying value and what they retired them for creates a gain or loss. You have to remove the bond payable and any premium or discount, the cash that was paid to retire them, and then the gain or loss.

2008 2007
Assets
Cash $ 36000 31000
Accounts receivable (net) 80000 60000
Prepaid Insurance 25000 17000
Land 18000 40000
Equipment 70000 60000
Accumulated Depreciation (20000) (13000)
Total Assets 209000 195000


Liabilities and Stockholder’s Equity
Accounts Payable 11000 6000
Bonds Payable 27000 19000
Common Stock 140000 115000
Retained Earnings 31000 55000
Total Liabilities and Stockholder’s equity 209000 195000

Additional information:
1. Net loss for 2008 is $15,000.
2. Cash dividends of $9,000 were declared and paid in 2008.
3. Land was sold for cash at a loss of $7,000. This was the only land transaction during the year.
4. Equipment with a cost of $15,000 and accumulated depreciation of $10,000 was sold for $5,000 cash.
5. $12,000 of bonds were retired during the year at carrying (book) value.
6. Equipment was acquired for common stock. The fair market value of the stock at the time of the exchange was
$25,000.
Instructions
Prepare a statement of cash flows for the year ended 2008, using the indirect method