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Question
Complete each of the columns in the following table, indicating in which section each item would be reported on the statement of cash flows (operating, investing, or financing), the amount that would be reported, and whether the item would create an increase or decrease in cash. For items that affect more than one section of the statement, indicate all affected. Assume that the indirect method of reporting cash flows from operating activities is used.
The first item has been completed as an example.
Item | Statement Section | Amount to Report | +/– Effect on Cash |
| Depreciation of $15,000 for the period | Operating | $15,000 | Increase |
| Issuance of common stock for $35,000 | |||
| Increase in accounts payable of $7,000 | |||
| Retirement of $100,000 bonds payable at 97 | |||
| Purchase of long-term investments for $94,500 | |||
| Dividends declared and paid of $8,300 | |||
| Increase in prepaid rent of $4,500 | |||
| Decrease in inventory of $5,300 | |||
| Purchase of equipment for $17,600 cash | |||
| Sale of land originally costing $134,000 for $130,000 | |||
| Decrease in taxes payable of $2,100 |
Answer
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