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Chapter 14: Q17E (page 775)

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

Step-by-Step SolutionStep 1: 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

Preparing a statement of cash flows using the direct method Jelly Bean, Inc. began 2018 with cash of \(58,000. During the year, Jelly Bean earned revenue of \)595,000 and collected \(614,000 from customers.Expenses for the year totaled \)427,000, of which Jelly Bean paid \(212,000 in cash to suppliers and \)205,000 in cash to employees. Jelly Bean also paid \(148,000 to purchase equipment and a cash dividend of \)57,000 to its stockholders during 2018. Prepare the company’s statement of cash flows for the year ended December 31, 2018. Format operating activities by the direct method.

Question: If current liabilities increase, what is the effect on cash? What about a decrease in current liabilities?

Julie Lopez Company expects the following for 2018:

  1. Net cash provided by operating activities of \(148,000.
  2. Net cash provided by financing activities of \)56,000.
  3. Net cash used for investing activities of \(77,000 (no sales of long-term assets).
  4. Cash dividends paid to stockholders of \)7,000.

How much free cash flow does Lopez expect for 2018?

Computing cash flow items—direct method Consider the following facts:

  1. Beginning and ending Accounts Receivable are \(24,000 and \)20,000, respectively. Credit sales for the period total \(68,000.
  2. Cost of goods sold is \)77,000.
  3. Beginning Merchandise Inventory balance is \(29,000, and ending Merchandise Inventory balance is \)26,000.
  4. Beginning and ending Accounts Payable are \(12,000 and \)16,000, respectively.

Requirements

  1. Compute cash collections from customers.
  2. Compute cash payments for merchandise inventory

Question: What types of transactions are reported in the non-cash investing and financing activities section of the statement of cash flows?
See all solutions

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