Exercise 12-2 An analysis of comparative balance sheets, the current year\'s inc

Question

Exercise 12-2 An analysis of comparative balance sheets, the current year's income statement, and the general ledger accounts of Judd Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary. Indicate how each item should be classified in the statement of cash flows using these four major classifications: operating activity (indirect method), investing activity, financing activity, and significant noncash investing and financing activity (a) Payment of interest on notes payable. (b) Exchange of land for patent. (e) Sale of building at book value (d) Payment of dividends. (e) Depreciation. (ft) Conversion of bonds into common stock. (9) Receipt of interest on notes receivable. (h) Issuance of capital stock. ) Amortization of patent. ) Issuance of bonds for land (k) Purchase of land. () Receipt of dividends on investment in stock. (m) Loss on disposal of plant assets. (n) Retirement of bonds

Explanation / Answer

a Payment of interest on Notes Payable Operating Activities (Indirect Method) b Exchange of Land for Patent Significant non cash Investing & Finacing Activity c Sale of Building at Book Value Investing Activities d Payment of Dividends Finacing Activities e Depreciation Operating Activities (Indirect Method) Operating Section - Add depreciation to Net Opearting Income to get Net Cash inflow from Operating Activities f Conversion of bonds into Common Stock Significant non cash Investing & Finacing Activity g receipt of Interet on Notes receivables Operating Activities h Issuance of capital Stock Finacing Activities i Amortization of Patent Operating Activities (Indirect Method) Operating Section - Add Amortization to Net Opearting Income to get Net Cash inflow from Operating Activities j Issuance of bonds for land Significant non cash Investing & Finacing Activity k Purchase of Land Investing Activities l Receipt of dividends on investment in Stock Investing Activities & Operating Activities (Indirect Method) Deduct the Dividends received in Net Operating Income & Add to Investing Activities. m Loss on disposal of Plant Assets Investing Activities & Operating Activities (Indirect Method) Deduct the Loss from Operating Activities, n Retirement of Bonds Finacing Activities

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