Assuming a statement of cash flows is prepared using the indirect method, indica

Question

Assuming a statement of cash flows is prepared using the indirect method, indicate the reporting of the transactions and events listed below by major categories on the statement. Use the following code letters to indicate the appropriate category under which the item would appear on the statement of cash flows.

Code Cash Flows From Operating Activities CODES:

Add to Net Income: A

Deduct from Net Income: D

Cash Flows From Investing Activities: IA

Cash Flows From Financing Activities: FA Category

1. Common stock is issued for cash at an amount above par value ____

2. Merchandise inventory increased during the period ____

3. Depreciation expense recorded for the period ____

4. Building was purchased for cash ____

5. Bonds payable were acquired and retired at their carrying value ____

6. Accounts payable decreased during the period ____

7. Prepaid expenses decreased during the period ____

8. Treasury stock was acquired for cash ____

9. Land is sold for cash at an amount equal to book value ____

10. Patent amortization expense recorded for a period ____

Explanation / Answer

Solution Merchandise inventory increased during the period D Depreciation expense recorded for the period A Building was purchased for cash IA Bonds payable were acquired and retired at their carrying value FA Accounts payable decreased during the period D Prepaid expenses decreased during the period A Treasury stock was acquired for cash IA Land is sold for cash at an amount equal to book value IA Patent amortization expense recorded for a period A

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