Question

a recent fiscal year: Problems: Set B (a) Classification PI7-18 You are provided with the following transactions that took place during a recent fis impact on 01) AP ons by Transaction 1. Paid telephone bill for the month. 2. Sold land for cash, at a gain. 3. Acquired land by issuing common shares. 4. Paid a cash dividend to preferred shareholders. 5. Performed services for cash. 6. Performed services on account. 7. Purchased inventory for cash. 8. Purchased inventory on account. 9. Paid income tax. 10. Made principal repayment on a trade note payable. 11. Paid semi-annual bond interest. 12. Received rent from a tenant in advance. 13. Recorded depreciation expense. 14. Reacquired common shares at a price greater than the average cost of the shares. 15. Issued preferred shares for cash. 16. Collected cash from customers on account. 17. Issued a note payable. 18. Paid insurance for the month. Instructions Assuming the company is reporting under IFRS, complete the above table for each of the following requirements, assuming none of the transactions were previously accrued. The first one has been done for you as an example. (a) Classify each transaction as an operating activity (O), an investing activity (1), a financing activity for noncash transaction (NC) on the cash flow statement. If there is choice in how a transaction is a indicate the alternative classifications.

Answer 1

Solution

No.	Transaction	(a) Classification	(b) Cash
1	Paid telephone bill for the month	O	Decrease
2	Sold land for cash at a gain	I	Increase
3	Acquired land by issuing common shares	NA	NE
4	Paid a cash dividend to preferred shareholders	F	Decrease
5	Performed service for cash	O	Increase
6	Performed service on account	NA	NE
7	Purchased inventory for cash	O	Decrease
8	Purchased inventory on account	NA	NE
9	Paid income tax	O	Decrease
10	Made principal repayment on a trade note payable	F	Decrease
11	Paid semi-annual bond interest	O	Decrease
12	Received rent from a tenant in advance	O	Increase
13	Recorded depreciation expense	NA	NE
14	Reacquired common shares at a price greater than the average cost of the shares	F	Decrease
15	Issued preferred shares for cash	F	Increase
16	Collected cash from customers on account	O	Increase
17	Issued a note payable	F	Increase
18	Paid insurance for the month	O	Decrease

Notations –

O – Operating Activity

I – Investing Activity

F – Financing Activity

NE – No Effect

NA – Not Applicable