For each of the following transactions, indicate whether operating (O), investin

Question

For each of the following transactions, indicate whether operating (O), investing (I), or financing activities (F) are affected and whether the effect is a cash inflow (+) or outflow (–), or (NE) if the transaction has no effect on cash.

(TIP: Think about the journal entry recorded for the transaction. The transaction affects net cash flows if and only if the account Cash is affected.)

6. Paid cash to purchase new equipment.

7. Issued long-term debt for cash.

8. Collected payments on account from customers.

9. Recorded and paid salaries to employees.

* you are going to determine what the activity and cash flows of the questions.
Activity = operating, investing, financing activity
Cash Flows = cash inflow (+) or outflow (–), or No Effect

Explanation / Answer

6. Paid cash to purchase new equipment - ( I ), ( - )                         Journal Entry Equipment      Dr      Cash           Cr 7. Issued long term debt for cash - ( F ), ( + )                          Journal Entry Cash                             Dr    Debt Instrument         Cr 8. Collected payments on account from customers - ( O ), ( + )                         Journal Entry Cash                    Dr      Customers      Cr 9. Recorded and paid salaries to employees - ( O ), ( - )                        Journal Entry Salaries              Dr     Cash              Cr Note: O = Operating Activities, F = Financing Activities, I = Investing Activities, + = Increase,                   - = Decrease. Thank you, 6. Paid cash to purchase new equipment - ( I ), ( - )                         Journal Entry Equipment      Dr      Cash           Cr 7. Issued long term debt for cash - ( F ), ( + )                          Journal Entry Cash                             Dr    Debt Instrument         Cr 8. Collected payments on account from customers - ( O ), ( + )                         Journal Entry Cash                    Dr      Customers      Cr 9. Recorded and paid salaries to employees - ( O ), ( - )                        Journal Entry Salaries              Dr     Cash              Cr

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