Part 1. Classify Cash Flows Classify each of the transactions for Punchline Inc.
ID: 2490400 • Letter: P
Question
Part 1. Classify Cash Flows Classify each of the transactions for Punchline Inc. below as a cash inflow or cash outflow from operating activities, investing activities or financing activities. Enter your answers in the table below. The first transaction has been completed for you.
Transaction Inflow or Outflow?
Operating, Investing, or Financing Activity?
Issues $200,000 of common stock for cash (EXAMPLE ANSWER) Inflow Financing
Purchased machinery for $35,000
Recorded cash sales of $167,000
Collected a $17,000 receivable from a customer
Paid dividends of $225,000 in cash
Paid a $25,000 account payable
Purchased $15,000 in stock from another company
Sold an investment that cost $15,000 for $15,000
Issued bonds at face value for $27,000
Purchases treasury stock for $40,000
Paid $7,500 to renew an insurance policy
Explanation / Answer
Particulars Inflow/Outflow Operating/Investing/Financing Purchased machinery for $35,000 Outflow Investing Recorded cash sales of $167,000 Inflow Operating Collected a $17,000 receivable from a customer Inflow Operating Paid dividends of $225,000 in cash Outflow Financing Paid a $25,000 account payable Outflow Operating Purchased $15,000 in stock from another company Outflow Operating Sold an investment that cost $15,000 for $15,000 Inflow Investing Issued bonds at face value for $27,000 Inflow Financing Purchases treasury stock for $40,000 Outflow Investing Paid $7,500 to renew an insurance policy Outflow Operating