Part 2: Listed below are several transactions that typically produce either an i

Question

Part 2: Listed below are several transactions that typically produce either an increase or a decrease in cash. Indicate by letter whether the cash effect of each transaction is reported on a statement of cash flows as an operating (O), investing (), or financing (F) activity. Also, if it is a cash inflow put a plus sign before the letter. If it is a cash outflow, then put a minus sign before the letter. For example for a cash inflow from financing activities, put a +F. Assume that the direct method is used. Number Transaction Letter 1Sale of preferred stock 2 Sale of equipment at a gain 3 Purchase of treasury stock 4 Merchandise sales 5 Issuance of a short-term note pavable 6 Purchase of invento 7 Re 8 Emplovee salaries 9 Sale of land nent of a note pavable 10Issuance of bonds 11Acquisition of bonds of another corporation 12 Pavment of semiannual interest on bonds pavable 13 Pavment of a cash dividend 14Purchas of an office buildin Collection of nontrade notes receivable (principal 15 amount 16 Loan to another compan 17 Retirement of common stock 18 Pavment of income taxes 9 Issuance of a long-term notes payable 20 Sale of a patent

Explanation / Answer

1 Sale of preferred stock +F 2 Sale of equipment at gain +I 3 Purchase of treasury stock -F 4 Merchandise sales +O 5 Issuance of a short term note payable +F 6 Purchase of inventory -O 7 Repayment of a note payable -F 8 Employee salaries -O 9 Sale of land +I 10 Issuance of bonds +F 11 Acquistion of bonds of another corporation -I 12 Payment of semi annual interest on bonds payable -O 13 Payment of cash dividend -F 14 Purchase of an office building -I 15 Collection of non trade notes receivable +I 16 Loan to another company -I 17 Retirment of common stock -F 18 Payment of income taxes -O 19 Issuance of long term note payable +F 20 Sale of a patent +I

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