Transaction details: Sold 1,000 shares @ $55 each to investors. Cash sales of $1

Question

Transaction details: Sold 1,000 shares @ $55 each to investors. Cash sales of $12,000. Received $25,000 cash from bank loan; signed 2-year note payable. Bought new delivery truck for $35,000; paid cash. Paid accounts payable balance of $10,800 in cash. Paid $5.00 dividend per share to investors. Paid income tax expense $4,200. Purchased new factory equipment for $3,500; paid cash. Required: Identify each transaction (a-h) as an Operating, Investing, or Financing activity. a.________b.________c.________d.________e.________f.________g.________h.________Fill in the missing totals. Net Change in Cash From Operations________Net Change in Cash from Investing________Net Change in Cash from Financing________Change in Cash for Period________Beginning Cash________Ending Cash________

Explanation / Answer

Identify each transaction (a-h) as an operating, investing or financing:

a

Financing

b

Operating

c

Financing

d

Investing

e

Operating

f

Financing

g

Operating

h

Investing

2.

Fill in the missing totals:

Details

Amount

Net change in cash from operations

$         (3,000)

Net change in cash from Investing

$       (38,500)

Net change in cash from Financing

$         75,000

Change in cash for period

$         33,500

Beginning cash

$                   -  

Ending cash

$         33,500

Notes to the above calculations:

Cash flow statement

Net change in cash from operations

Cash sales

$         12,000

Paid for accounts payable

$       (10,800)

paid income tax expense

$         (4,200)

   Cash flow (used in) from operating activities

$         (3,000)

Net change in cash from Investing

Purchase of new delivery truck

$       (35,000)

Purchase of new factory equipment

$         (3,500)

   Cash flow (used in) from investing activities

$       (38,500)

Net change in cash from Financing

Sales of shares (1000*$55)

$         55,000

Received cash from notes payable

$         25,000

Dividend paid ($5*1000)

$         (5,000)

   Cash flow (used in) from financing activities

$         75,000

Change in cash for period

$         33,500

Beginning cash

$                   -  

Ending cash

$         33,500

a

Financing

b

Operating

c

Financing

d

Investing

e

Operating

f

Financing

g

Operating

h

Investing

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