Question

Identify the category of the statement of cash flows in which each transaction would be reported.

a. Purchased equipment for​ $130,000 cash.
b. Issued​ $14 par preferred stock for cash.
c. Cash received from sales to customers of​ $35,000.
d. Cash paid to​ vendors, $17,000.
e. Sold building for​ $19,000 gain for cash.
f. Purchased treasury stock for​ $28,000.
g. Retired a notes payable with​ 1,250 shares of the​ company's common stock.

Answer 1

The statement of cash flows categorizes transactions into operating, investing, and financing activities. Each transaction in the provided list falls into one of these categories.

Step-by-step explanation:

The statement of cash flows categorizes transactions into three categories: operating activities, investing activities, and financing activities.

a. Purchased equipment for​ $130,000 cash would be reported as an investing activity because it involves the acquisition of a long-term asset.

b. Issued​ $14 par preferred stock for cash would be reported as a financing activity because it involves the issuance of stock.

c. Cash received from sales to customers of​ $35,000 would be reported as an operating activity because it is revenue generated from the primary operations of the business.

d. Cash paid to​ vendors, $17,000 would also be reported as an operating activity because it is an expense related to the primary operations of the business.

e. Sold building for​ $19,000 gain for cash would be reported as an investing activity because it involves the sale of a long-term asset.

f. Purchased treasury stock for​ $28,000 would not be reported on the statement of cash flows because it is not a cash flow activity.

g. Retired a notes payable with​ 1,250 shares of the​ company's common stock would be reported as a financing activity because it involves the repayment of a liability using stock.