Question

The Westside Deli has engaged in several transactions during the year as follows: Type of liquidity activity Cash Transactions 1. 2. 3. 4. 5. 6. 7. 8. Purchased a delivery van for $15,000 and paid cash Sold 100 shares of capital stock with a S5 par value per share for 10S per share Borrowed S15,000 from the local saving and loan institution on a long-terms basis Paid dividends of S10,000 during the year Sold investments, with book value of $8,000, for $6,000 Purchased short-term investments for $4,500 Repurchased 50 shares of its own capital stock for $300 Purchased vacant land for $10,000 for potential expansion two years hence Required: Identify how each transaction would be classified for the purpose of creating a statement of cash flows.

Answer 1

Identify the transactions as follows: Transactions Cash liquidty Type of activity 2 1 Purchase of delivery van 3 2 Sold 100 shares of capital stock 4 3 Borrowed funds 5 4 Paid dividend 6 5 Sold investment for $6000 7 6 Purchase of short term investment 8 7 Repurchase of own capital stock at $6 per share ($300/50 shares 9 8Purchase of vacant land Decrease S -15,000.00 Investing activi Increase S 1,000.00 Financing activi Increase S 15,000.00Financing activi Decrease -10,000.00 Financing activi Increase 6,000 Decrease S -4,500.00 Investing activi Decrease S300.00 Financing activi Decrease -10,000.00 Investing activi 00 Investing activi