c. purchased equipment costing 96,375 by paying 25,000 cash and signing a long t
ID: 2369906 • Letter: C
Question
c. purchased equipment costing 96,375 by paying 25,000 cash and signing a long term note payable for the balance.
d. borrowed 3,750 cash by signing a short term note payable.
e. paid 31,375 cash to reduce the long term notes payable.
f. issued 2,500 shares of common stock for $18 cash per share.
g. declared and paid cash dividends of 62,125.
prepair a complete statement of cash flows using above pictures. report its operating activities using the indirent method. identify the debits and credits in the analysis of changes columns that correspond to following events:
a. net income was 73,750
b. accounts receivable increased
c. merchandize inventory increased.
d. prepaid expenses decreased.
e. accounts payable decreased.
f. depreciation expense was 18,750.
g. sold equipment costing 46,875, with accumulated depreciation of 28,125 for 13,625 cash. this yeilded a loss of 5,125
h. purchased equipment costing 96,375 by paying 25,000 cash and (i) by signing a long term note payable for the balance.
j. borrowed 3,750 cash by signing a short term note payable
k. paid 31,375 cash to reduce the long term notes payable.
l. issued 2,500 shares of common stock for $18 cash per share.
m. declared and paid cash dividends of 62,125
Explanation / Answer
C. Purchased equipment costing 76375 by paying 15,000 cash and signing a long-term note payable for the balance
-the downpayment would be deducted in IA. The N/p will have no effect on the statement
D. Borrowed 4740 cash by signing a short term note payable
-this would be an addition in the FA
E. Pd. 21,276 cash to reduce the long-term notes payable
-deduction from the FA
F. Issued 1500 shares of common stock for 15 cash per share
-under FA, added
G. Declared and pd. Cash dividends of 26,521
-FA deduction
Basically if it is transaction that involves the generation of profit or expenses of the company, ot would be under operating activities. (current assets, current liabily)
If it the cash flow is related to long term investments (i.e PPE, equity securities, etc.) the it would be classified under investing activities.
And for financing activities, the long term debt and equity account.
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