An analysis of comparative balance sheets, the current year\'s income statement,
ID: 2460170 • Letter: A
Question
An analysis of comparative balance sheets, the current year's income statement, and the general ledger accounts of Judd Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary. Indicate how each item should be classified in the statement of cash flows using these four major classifications: operating activity (indirect method), investing activity, financing activity, and significant noncash investing and financing activity. (a)Payment of interest on notes payable. (b)Exchange of land for patent. (c)Sale of building at book value. (d)Payment of dividends. (e)Depreciation. (f)Conversion of bonds into common stock. (g)Receipt of interest on notes receivable. (h)Issuance of capital stock. (i)Amortization of patent. k) Issuance of bonds for land. (k) Purchase of land. (l) Receipt of dividends on investment in stock. (m) Loss on disposal of plant assets. (n) Retirement of bonds.Explanation / Answer
payment of interest on notes payable Operating activity Exchange of land for patent non cash investing activity sale of building at book value investing activity payment of dividends financing activity depreciation operating activity Should be added to the net profit to arrive at the cash flow from operating activity conversion of bonds into common stock non cash financing activity receipt of interest on notes receivable investing activity issuance of capital stock financing activity Amortization of patent Operating activity Should be added to the net profit to arrive at the cash flow from operating activity Issuance of bonds for land non cash financing activity purchase of land investing activity receipt of dividends on investment in stock investing activity loss of disposal of plant assets Operating activity Should be added to the net profit to arrive at the cash flow from operating activity retirement of bonds financing activity