2. Classification of activities Classify each of the following transactions as a
ID: 2455052 • Letter: 2
Question
2. Classification of activities
Classify each of the following transactions as arising from an operating (O), investing (I), financing (F), or noncash investing/financing (N) activity.
a. ________ Received $80,000 from the sale of land.
b. ________ Received $3,200 from cash sales.
c. ________ Paid a $5,000 dividend.
d. ________ Purchased $8,800 of merchandise for cash.
e. ________ Received $100,000 from the issuance of common stock.
f. ________ Paid $1,200 of interest on a note payable.
g. ________ Acquired a new laser printer by paying $650.
h. ________ Acquired a $400,000 building by signing a $400,000 mortgage note.
Explanation / Answer
Note : Interest Expenses are controversy that it may be treated as operating activity or Finacing Activity, It argued that the fund are used for operating and expenses incurred on it is treated as operating activity where as some argued that Amount borrowed are financing activity and any amount paid on it is to be treated as financing activity, But normally it is treated as cash flow from operating activity
a. Investing Activity Received $80,000 from the sale of land. b. Operating Activity Received $3,200 from cash sales. c. Financing Activity Paid a $5,000 dividend. d. Operating Activity Purchased $8,800 of merchandise for cash. e. Financing Activity Received $100,000 from the issuance of common stock. f. Operating Activity Paid $1,200 of interest on a note payable. g. Investing Activity Acquired a new laser printer by paying $650. h. Noncash investing/financing (N) activity Acquired a $400,000 building by signing a $400,000 mortgage note.Related Questions
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