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Chapter 14: 17E (page 732)

Classifying transactions on the statement of cash flows—indirect method Consider the following transactions:

Identify the category of the statement of cash flows, indirect method, in which each transaction would be reported.

Short Answer

Expert verified
  1. Financing
  2. Investing
  3. Operating
  4. Investing
  5. Operating
  6. Financing
  7. Non-cash
  8. Investing
  9. Financing
  10. Non-cash
  11. Investing

Step by step solution

01

Classification of operating activities

c. Sales revenue of $88,000 is an operating activity.

e. Depreciation expense of $6,800 is an operating activity.

02

Classification of investing activities

b. Treasury stock sold for $16,500 is an investing activity.

d. Land purchased for cash $103,000 is an investing activity.

h. Equipment sold for $9,600 is an investing activity.

k. Loss of $1,800 on disposal of equipment is an investing activity.

03

Classification of financing activities

a. Issuance of common stock for cash of $72,000 is a financing activity.

f. Cash paid for dividends is a financing activity.

i. Bonds payable of $51,000 is a financing activity

04

Classification of non-cash activities

g. Land in exchange of notes payable is a non-cash activity.

j. Building in exchange of notes payable is a non-cash activity

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Most popular questions from this chapter

The 2018 comparative balance sheet and income statement of Appleton Group, Inc. follow. Appleton disposed of a plant asset at book value during 2018

Prepare the spreadsheet for the 2018 statement of cash flows. Format cash flows from operating activities by the indirect method. A plant asset was disposed of for \(0. The cost and accumulated depreciation of the disposed asset was \)11,600. There were no sales of land, no retirement of common stock, and no treasury stock transactions. Assume plant asset and land acquisitions were for cash.

Use the Rouse Exercise Equipment data in Exercise E14-23. Prepare the company’s statement of cash flows—indirect method—for the year ended December 31, 2018. Assume investments are purchased with cash.

Accountants for Benson, Inc. have assembled the following data for the year ended December 31, 2018:

2018 2017 Current Assets: Cash \( 105,100 \) 18,000 Accounts Receivable 64,400 68,900 Merchandise Inventory 86,000 82,000 Current Liabilities: Accounts Payable 58,000 56,100 Income Tax Payable 14,700 16,900

Transaction Data for 2018:

Issuance of common stock for cash \( 37,000

Payment of notes payable \) 47,100

Depreciation expense 24,000

Payment of cash dividends 53,000

Purchase of equipment with cash 69,000

Issuance of notes payable to borrow cash 68,000

Acquisition of land by issuing long-term notes payable 123,000

Gain on sale of building 4,500

Book value of building sold 61,000

Net income 66,000

Prepare Benson’s statement of cash flows using the indirect method. Include an accompanying schedule of non-cash investing and financing activities

Identifying and reporting non-cash transactions

Dirtbikes, Inc. identified the following selected transactions that occurred during the year ended December 31, 2018:

  1. Issued 750 shares of \(3 par common stock for cash of \)17,000.
  2. Issued 5,100 shares of \(3 par common stock for a building with a fair market value of \)96,000.
  3. Purchased new truck with a fair market value of \(29,000. Financed it 100% with a long-term note.
  4. Retired short-term notes of \)28,000 by issuing 1,900 shares of \(3 par common stock.
  5. Paid long-term note of \)10,500 to Bank of Tallahassee. Issued new long-term note of $23,000 to Bank of Trust.

Identify any non-cash transactions that occurred during the year, and show how they would be reported in the non-cash investing and financing activities section of the statement of cash flows

Question: How does the statement of cash flows help users of financial statements?
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