Question

BE17-1 Each of the items below must be considered in preparing a statement of cash fl ows for Baskerville Co. For the year ended December 31, 2017. For each item, state how it should be shown in the statement of cash fl ows for 2017. (a) Issued bonds for $200,000 cash. (b) Purchased equipment for $150,000 cash. (c) Sold land costing $20,000 for $20,000 cash. (d) Declared and paid a $50,000 cash dividend

Answer 1

(a) To be shown cash inflows from financing activity

(b) To be shown as cash outflows from investing activity

(c) To be shown as cash inflow from investing activity

d) To be shown as cash outflows from financing activity

Step-by-step explanation:

(a) Issued bonds for $200,000 cash.

This should be shown as a cash inflow under financing activity section of the statement of cash flows for 2017.

(b) Purchased equipment for $150,000 cash.

This should be shown as a cash outflow under investing activity section of the statement of cash flows for 2017.

(c) Sold land costing $20,000 for $20,000 cash

This should be shown as a cash inflow under investing activity section of the statement of cash flows for 2017.

(d) Declared and paid a $50,000 cash dividend

This should be shown as a cash outflow under financing activity section of the statement of cash flows for 2017.

Additional Note:

Although this is not part of the requirement of the question, but it will assist you in your learning.

After taking all the above into consideration, they will appear as follows in statement of cash flows for 2017 (Note only they will appear is shown without any calculations since there will be other items).

Baskerville Co.

Statement of Cash Flows for 2017

(Abridged Vesrion)

Details $ $

Cash from operating activities

Cash flows from investing activities

Purchase of equipment (150,000)

Soles of land 20,000

Cash flows from financing activities:

Bond issued 200,000

Cash dividend paid (50,000)