5. Grey Co had the following transactions during 2018: l. issued S50,000 par val

Question

5. Grey Co had the following transactions during 2018: l. issued S50,000 par value common common stock for cash. 2. Collected $11,000 of accounts receivable 3. declared and paid a cash dividend of $25,000 4. sold a long-term investment with a cost of $15,000 for $20,000 5. paid $14,000 of accounts payable 6. bought a machine for $30,000, giving a lon-term note in exchange, indicate whether each of the transactions resulted from operating, investing, financing, or noncash investing and financing activities.

Explanation / Answer

The Transaction will be categorized as follows:

Transaction 1 - Financing activity; We have raised finance by issuing stock

Transaction 2 - Operating Activity; normal business activity

Transaction 3 - Financing Activity; Payment to shareholders

Transaction 4 - Investing Activity; Sold an asset investment

Transaction 5 - Operating Activity; normal business activity

Transaction 6 - Non-cash Investing Activity; Doesn't involve cash for the purchase of the new asset

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