Question

Each of the items below must be considered in preparing a statement of cash flows for Alpha-Omega Co. for the year ended December 31, 2014. For each item, state how it should be shown in the statement of cash flows for 2014.

a. Issued bonds for $150,000 cash.
b. Purchased equipment for $200,000 cash.
c. Sold land costing $50,000 for $50,000 cash.
d. Declared and paid a $20,000 cash dividend.

Answer 1

Answer and Explanation:

The categorization is as follows:

a. The bond issued at cash - Financing activity (cash inflow)

b. The equipment purchased for cash - Investing activity (cash outflow)

c. The land is sold for cash - Investing activity (cash inflow)

d. The dividend is paid for cash - financing activity (cash outflow)