Question

correct answer explaind

ANSWER. Write the word or phrase tha word or phrase that best completesch statement or answer the question answers the question. 23) For each of the following transactions the section in which it will be in the operating section, I for the investing activities section. F for the financing separate schedule of noncash investing and financing activities, and for item disclosed on the statement of cash flows. ection in which it will be included. Use O for ctivities section, F for the financing section. S for a Paid cash dividends b Paid interest on a short-term note payable C Sold treasury stock for cash d. Converted debt to common stock e Paid accounts payable f. Paid salaries 8Received cash dividends h. Sold merchandise for cash 1. Acquired a patent by issuing common stock 1 Purchase of land using preferred stock k. Received stock dividends 24) For each of the following independent transactions, indicate the type of activity (operating investing or financing) and the effect on cash (amount and increase or decrease). Type of Activity Effect on Cash Transaction a. Declared cash dividends of $21.000 during the current period. Dividends payable on January 1 were $1,500 and on December 31 were $2,300. b. Interest income on the income statement for the current period was $22,000. Interest receivable on January 1 was $2,700 and on December 31 was $2,250. c. Issued 1,000,000 of 10-year, 10% bonds at 102. d. Sales on account for the current period were $160,000. Accounts receivable on January 1 were 595,000 and on December 31 were $106,000. e Equipment was purchased for $215,000. f. Sold 1,000 shares of 20 par common stock for cash at $29. 8. Salary expense for the current period was $151,500. Salary payable on January 1 was $20,300 and on December 31 was $17,800.

Answer 1

23) Classification of Cashflows

Transaction	Activity	Explanation
a)	F	Since the dividend is paid on shares/ stock and this is a financing option for the company through which funds are raised.
b)	O	Since the short term notes payable is accepted for a temporary period for operations, interest paid on it is an Operating activity.
c)	I	Treasury stock in an investment.
d)	S	Conversion doesn't result in any cash flow. But supplementary disclosure to be made.
e)	O	Paying accounts payable is due to regular operations. Ex; purchases made or services obtained.
f)	O	Salaries are a regular operating expense
g)	I	Since dividends received on the investments made
h)	O	Sales is a general operating activity
i)	S	Doesn't result in any cash flow. But supplementary disclosure to be made.
j)	S	Doesn't result in any cash flow. But supplementary disclosure to be made.
k)	N	No cash flow.

24)

Transaction	Type of activity	Increase/ (Decrease)
a)	Financing	Decrease of Cash to the extent dividend paid ($1500+21000 -2300 = $ 20,200
b)	Investing	Increase of Cash to the extent interest received ($2700 + 22,000 - 2250 = $ 22,450
C)	Financing	Increase of Cash raised thru bonds ( $ 1000,000)
d)	Operating	Increase of cash thru net Cash collection ($ 95,000+160,000-106,000 = $ 149,000
e)	Investing	Decrease of Cash = $ 215,000
f)	Investing	Increase of cash = $ 29,000
g)	Operating	Decrease of Cash = $ 20,300 + 151,500 - 17,800 = $ 154,000