Question

In: Accounting

Each of the following items listed below indicate how it would be reported on the statement...

Each of the following items listed below indicate how it would be reported on the statement of cash flows, using the following legend (assume the company uses the indirect method for operating activities

A Operating activity add to income

B Operating activity deduct from income

C Cash provided by investing activities

D Cash used for investing activities

E cash provided by financing activies

F Cash used for financing activities

___ 1. Purchase acme co common stock (purchase stock of own company) for $100,000

___ 2. Sold truck with book value of $7,000 for $3,000

___ 3. Declared cash dividends on common stock of $15,000 to be paid next year

___ 4. Redemption of company bonds for $95,000: the bonds had a carrying and face value of $100,000. (we retired-paid of debt)

___ 5. Recorded $49,000 of amortization for an intangible asset

___ 6. Purchased a new truck for $29,000: installment purchase, no cash down payment

___ 7. increase in accounts receivable from beginning to end of year of $12,000

___ 8. Collected $26,000 in cash from customer's payments on account receivables. Of that amount $20,000 related to sales made in the previous year

Solutions

Expert Solution

The classifcations are as follows:

1. Purchase acme co common stock (purchase stock of own company) for $100,000

Cash used for financing activities

2. Sold truck with book value of $7,000 for $3,000

Cash provided by investing activities $3000

Operating activity add to income $4000

3. Declared cash dividends on common stock of $15,000 to be paid next year

None of the activities

4. Redemption of company bonds for $95,000: the bonds had a carrying and face value of $100,000. (we retired-paid of debt)

Cash used for financing activities

5. Recorded $49,000 of amortization for an intangible asset

Operating activity add to income

6. Purchased a new truck for $29,000: installment purchase, no cash down payment

None of the activities

7. increase in accounts receivable from beginning to end of year of $12,000

Operating activity deduct from income

8. Collected $26,000 in cash from customer's payments on account receivables. Of that amount $20,000 related to sales made in the previous year

Operating activity add to income


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