4G\". 74% 12:31 PM PROBLEM 29: Cash lows (\"cash flgws) indirest methad activiti

Question

4G". 74% 12:31 PM PROBLEM 29: Cash lows ("cash flgws) indirest methad activities. Bequirsd 1. Indicate if each transaction shuld be included in pcrational activities (o), investment ) financing (f) 9r if it is an activity that does not affect cash (N /A). 2. lodicate wbetber the ati ases or decreases the activities to. Pavment in cash of the principal of a bond. --.Increase in accounts payable ("accounts payable".)- , purchase equipment in cash. d. Purchase of a warebouse through tbe issuance of bonds, and. Sale of savipmsot with.profit F.Paxment af dividends. g. Decrease in contributions payable . Increase in inventory- --

Explanation / Answer

PROBLEM 29-

-- payment in cash of principal of a bond= Financing activities and will result in decrease of activity

-- Increase in Account payable= Operating activity and will increase the activity balance

-- Purchase equipement in cash= Investing activity and will result in decrease in balance

-- Purchase of warehouse through issuance of bond= Investing and financing activity.

-- Sale of Equipment with profit= Investing activity and Profit under Operating activity and will result in increase of investing activity balance and decrease of opearting activity.

-- Paymebt of dividend= Financing activity and will result in decrease in balance

-- Decrease of contribution payable= Opearting activity and will result in decrease in balance

-- Increase in Inventory= Opearting activity and will result in decrease in balance

-- Bad debts Expenses= Opearting activity and will result in decrease in balance

CASH FLOW STATEMENT (DIRECT METHOD)

PROBLEM 26-

1 Bond issued= Financing activity

2. Building sale= Investing activity

3. Purchase of patent=  Investing activity

4. Net income =Operating activity

5. Sale of long term investment= Investing activity

6. Sale of Merchandise = Operating activity under direct method

7. Payment of dividend= Financing activity

8. Interest received= Investing activity

9. Stock Issued= Financing activity

10. Purchase of shares= Financing activity

12. Dividend collection= Investing activity

13.salary payment= Operating activity under direct method

14. Bonds Principal payment= Financing activity

AMOUNT($) AMOUNT($) Cash flow from operating activity- Cash sales 40,000 Collection of account receivables 1,60,000 (less) Interest paid (5,000) Cash paid (80,000) Salary paid (25,000) Operating expenses (8,000) Net cash provided by operating activity 82,000 Cash flow from Investing activity- sale of land 32,000 cash from loan 45,250 (-)Equipment purchased (4,000) Net cash provided by investing activity 73,250 Cash flow from Financing activity- (-)Dividend paid (12,000) Net cash provided by Financing activity (12,000) Net Increase in Cash 1,43,250 + Opening cash balance 42,320 Closing cash balance 1,85,570

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