Question

E12.1 (LO 1) Tabares Corporation had these transactions during 2020. a. Issued $50,000 par value common stock for cash. b. Purchased a machine for $30,000, giving a long-term note in exchange. c. Issued $200,000 par value common stock upon conversion of bonds having a face value of $200,000. d. Declared and paid a cash dividend of $18,000. e. Sold a long-term investment with a cost of $15,000 for $15,000 cash. f. Collected $16,000 from sale of goods. g. Paid $18,000 to suppliers. Instructions Indicate whether each transaction is an operating activity, investing activity, financing activity, or noncash investing and financing activity.

Answer 1

Solution:

a.	Issued $50,000 par value common stock for cash	Financing
b.	Purchased a machine for $30,000 giving a long term note in exchange	Non cash Investing and financing
c.	Issued $200,000 par value common stock upon conversion of bonds having a face value of $200,000	Non cash Investing and Financing
d.	Declared and paid a cash dividend of $18,000	Financing
e.	Sold a long term investment with a cost of $15,000 for $15,000 cash	Investing
f.	Collected $16,000 from sale of goods	Operating
g.	Paid $18,000 to suppliers.	Operating

Explanation:

b. Purchased a machine giving a long term note in exchange - here there is no cash involved so it is a non cash and purchased a machine is a investing and Long term note exchange is a financing

c. In this transaction there is no cash involved, issued shares is a financing activity upon conversion of bonds is a investing activity