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Q16E

Expert-verified
Horngren'S Financial And Managerial Accounting
Found in: Page 774

Short Answer

Classifying cash flow items Consider the following transactions:

  1. Purchased equipment for $130,000 cash.
  2. Issued $14 par preferred stock for cash.
  3. Cash received from sales to customers of $35,000.
  4. Cash paid to vendors, $17,000.
  5. Sold building for $19,000 gain for cash.
  6. Purchased treasury stock for $28,000.
  7. Retired a notes payable with 1,250 shares of the company’s common stock.

Identify the category of the statement of cash flows in which each transaction would be reported.

  1. Investing
  2. Financing
  3. Operating
  4. Operating
  5. Investing
  6. Investing
  7. Non-cash
See the step by step solution

Step by Step Solution

Step-by-Step SolutionStep 1: Cash flow from operating activities

Cash Flow From Operating Activities

Amount($)

Cash received from sales to customers of

35,000

Cash paid to vendors

(17,000)

Cash flow provided by operating activities

18,000

Step 2: Cash flow from investing activities

Cash Flow From Investing Activities

Amount($)

Purchased equipment for $130,000 cash.

(35,000)

Sold building for $19,000 gain for cash.

19,000

Purchased treasury stock

(28,000).

Cash used by investing activities

44,000

Step 3: Cash flow from financing activities

Cash Flow From Financing Activities

Amount($)

Issued $14 par preferred stock for cash.

14

Net cash provided by financing activities

14

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