State the section(s) of the statement of cash flows prepared by the indirect method (operating activities, investingactivities, financing activities, or not reported) and the amount that would be reported for each of the followingtransactions: (a)

Question

Received $120,000 from the sale of land costing $70,000. (b) Purchased investments for $75,000. (c) Declared $35,000 cash dividends on stock. $5,000 dividends were payable at the beginningof the year, and $6,000 were payable at the end of the year. (d) Acquired equipment for $64,000 cash. (e) Declared and issued 100 shares of $20 par common stock as a stock dividend, when themarket price of the stock was $32 a share. (f) Recognized depreciation for the year, $37,000. (g) Issued 85,000 shares of $10 par common stock for $25 a share, receiving cash. (h) Issued $500,000 of 20-year, 10% bonds payable at 99. (i) Borrowed $43,000 from Regional Bank, issuing a 5-year, 8% note for that amount.

Answer 1

(a) Investing activities, $120,000 ($50,000 gain on the sale would be deductedfrom net income in determining the cash flows from operating activities)
(b) Investing activities, ($75,000)
(c) Financing activities, ($34,000)
(d) Investing activities, ($64,000)
(e) Not reported
(f) Operating activities, $37,000 (addition to net income in determining cashflows from operating activities)
(g) Financing activities, $2,125,000
(h) Financing activities, $495,000
(i) Financing activities, $43,000