Question

The Spartan Corporation has engaged in several transactions listed below:

REQUIRED: identify each transaction as (1) an operating activity, (2) an investing activity, (3) a financing activity, (4) a non cash transaction

1. sold food and Beverages for cash

2. Purchased investments

3. exchanged its common stock for long term

4. sold common stock

5. issued a stock dividend

6. paid salaries and wages

7 sold investments at a loss

8. paid a cash dividend

9. purchased a sixty day treasury bill

10. sold land for a gain

11. paid interest

12. received dividends from a an investment

13. paid for food and beverage supplies

14. paid long term debt

15. purchased equipment.

Answer 1

	TRANSACTION	Activity	Reasons for classification as specified under column No2
	1	2	3
1	Sold food and Beverages for cash	An operating activity	Normal business transaction relates to the business operations
2	Purchased investments	An investing activity	A capital Expenditure
3	Exchanged its common stock for long term	A financing activity	Bringing additional funds to expand or maintain operations
4	Sold common stock	A financing activity	Bringing additional capital to expand or maintain operations
5	Issued a stock dividend	A non cash transaction	No cash outflow happened when stock dividend issued
6	Paid salaries and wages	An operating activity	Regular transaction for upkeep of the operations
7	Sold investments at a loss	An investing activity	A capital Expenditure
8	Paid a cash dividend	A financing activity	Since this transaction relates to equity shareholders payment
9	Purchased a sixty day treasury bill	A financing activity	Bringing additional funds for operations
10	Sold land for a gain	An investing activity	A capital Expenditure
11	Paid interest	A financing activity	Interest payments for the finance availed to maintain operations
12	Received dividends from a an investment	A financing activity	Cash flow receipt on its investments.
13	Paid for food and beverage supplies	An operating activity	A revenue expenditure relating to the normal operations
14	Paid long term debt	A financing activity	Repayment of funds borrowed for expand or maintain operations
15	Purchased equipment.	An investing activity	A capital Expenditure