Question

Your answer is partially correct. Try again. Tabares Corporation had these transactions during 2019. Indicate whether each transaction is an operating activity, investing activity, financing activity, or noncash investing and financing activity. (a) Issued $50,000 par value common stock for cash. (b) Purchased a machine for $30,000, giving a long-term note in exchange. (c) Issued $200,000 par value common stock upon conversion of bonds having a face value of $200,000. (d) Declared and paid a cash dividend of $18,000. (e) Sold a long-term investment with a cost of $15,000 for $15,000 cash. (f) Collected $16,000 from sale of goods. (g) Paid $18,000 to suppliers. Click if you would like to Show Work for this question: Open Show Work

Answer 1

(a) Issued $50,000 par value common stock for cash. - Financing activity

(b) Purchased a machine for $30,000, giving a long-term note in exchange. - noncash investing and financing activity

(c) Issued $200,000 par value common stock upon conversion of bonds having a face value of $200,000. - Financing activity

(d) Declared and paid a cash dividend of $18,000. - Financing activity

(e) Sold a long-term investment with a cost of $15,000 for $15,000 cash. - Investing activity

(f) Collected $16,000 from sale of goods. - Operating activity

(g) Paid $18,000 to suppliers - Operating activity

Step-by-step explanation:

The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.

The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.

The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.