Several transactions entered into by Headland Retail during 2018 follow: Record

Question

Several transactions entered into by Headland Retail during 2018 follow:

Record each transaction on a chart like the following. Classify the sections of the statement of cash flows as a cash flow from operating, investing, or financing activities. Assume that the company uses the direct method.

*** For 9, how do you get the answer? ***

1. Received $46,000 for wine previously sold on account. 2. Paid $53,000 in salaries and wages. 3. Sold a building for $105,000. The building had cost $178,000, and the related accumulated depreciation at the time of sale was $52,000. 4. Declared and paid a cash dividend of $76,000. 5. Repurchased 9,000 shares of outstanding common stock at $55 per share. 6. Purchased a two-year, $100,000 fire and storm insurance policy on June 30. 7. Purchased some equipment in exchange for 900 shares of common stock. The stock was currently selling for $75 per share. 8. Purchased $495,000 in long-term investments. 9. Issued $205,000 face value bonds. The bonds were sold at 102. 10. Owed $27,000 in rent as of December 31. Transaction Effect on Cashh Section of Statement 46,000 Operating 2 53,000 Operating 105,000 Investing 4 76,000 Financing 495,000 Financing 6 100,000 Operating ? 7 No Effect N/A 495,000 Investing ? 205,000 Financing 10 No Effect V N/A

Explanation / Answer

in 9th point Face value of the bond is $205,000. but it sold for $102 per bond. it means they sold it for a total amount of $209,100. ($205,000/100*102). so cash inflow of $209,100 will be there

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