BE23-3 Novak Corporation is preparing its 2014 statement of cash flows, using th
ID: 2420198 • Letter: B
Question
BE23-3 Novak Corporation is preparing its 2014 statement of cash flows, using the indirect method. Pre- sented below is a list of items that may affect the statement. Using the code below, indicate how each item will affect Novak’s 2014 statement of cash flows. Items ____ (a) ____ (b) ____ (c) ____ (d) ____ (e) ____ (f) ____ (g) ____ (h) ____ (i) Purchase of land and building. Decrease in accounts receivable. Issuance of stock. Depreciation expense. Sale of land at book value. Sale of land at a gain. Payment of dividends. Increase in accounts receivable. Purchase of available-for-sale investment.
____ (j) ____ (k) ____ (l) ____ (m) ____ (n) ____ (o) ____ (p) ____ (q) ____ (r) Increase in accounts payable. Decrease in accounts payable. Loan from bank by signing note. Purchase of equipment using a note. Increase in inventory. Issuance of bonds. Redemption of bonds payable. Sale of equipment at a loss. Purchase of treasury stock.
Explanation / Answer
Effect a Purchase of land and Building Decrease in Cash Flow from Investing Activities b Decrease in Accounts Receivable Added to net income in cash flow from operating activities c Issuance of Stock Added to cash flow from financing activities d Depreciation Added to net income in cash flow from operating activities e Sale of land at book value Inrease in Cash Flow from Investing Activities f sale of land at a gain Inrease in Cash Flow from Investing Activities g payment of dividends Deducted from cash flow from financing activities h increase in Accounts Receivable Decrease from net income in cash flow from operating activities i Purchase of available for sale securities Decrease in Cash Flow from Investing Activities j Increase in Accounts payable Added to net income in cash flow from operating activities k Decrease in Accounts Payable Decrease from net income in cash flow from operating activities l Loan from Bank using note Increase in Cash Flow from Investing Activities m Purchase of Equipment using note Decrease in Cash Flow from Investing Activities n Increase in inventory Decrease from net income in cash flow from operating activities o issuance of bonds Increase in Cash Flow from Investing Activities p redemption of bonds payable Decrease in Cash Flow from Investing Activities q sale of equipment Increase in Cash Flow from Investing Activities r purchase of stock Decrease from cash flow from financing activities
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