Identify the Statement of Cash Flow Section
For each of the transactions below, determine whether it involves an operating activity, investing activity or financing activity. For each item, place an “X” in the appropriate column.
|Transaction||Operating Activity||Investing Activity||Financing Activity|
|Office supplies were purchased for cash.|
|Dividends were declared and paid.|
|Bonds payable with a face value of $100,000 were sold for cash at 96.|
|A building was purchased and paid for.|
|Treasury stock was sold.|
|Accounts Payable were paid off.|
|Common stock of another firm was purchased for cash.|
|A machine with an original cost of $30,000 was sold for $7,000. Accumulated Depreciation to date was $23,000.|
|Short-term marketable securities (not cash equivalents) were sold.|
|Interest expense on the bonds above was paid in cash.|
|Land was purchased for cash.|
|Dividends were received on the common stock acquired above.|
Use the following data for ABC Music Co. to prepare a statement of cash flows using the indirect method for the year ended June 30, 2016.
ABC Music Co.
For the Year Ended June 30, 2016
|Cost of Goods Sold||$200,000|
|Loss on Sale of Investment||500||
|Net Income||$ 32,500|
ABC Music Co.
Comparative Balance Sheets
June 30 2016 and 2015
|Cash||$ 4,500||$ 15,000|
|Accounts Receivable (net)||35,000||27,500|
|Long Term Investments||20,000||25,000|
|Plant and Equipment||80,000||40,000|
|Accounts Payable||$ 2,000||$ 6,000|
|Total Liabilities||$23,000||$ 19,000|
|Common Stock||$ 65,000||$ 65,000|
|Total Paid in Capital and Retained Earnings||146,500||129,000|
|Less: Treasury Stock||( 7,000)||0|
|Total Stockholders’ Equity||$139,500||$129,000|
|Total Liabilities and Stockholders’ Equity||$162,500||$148,000|
- A plant asset costing $20,000 was sold for its book value of $8,000. And additional plant asset was purchased for $60,000.
- A long term investment was sold for $4,500.
- The outstanding notes are long term. An $8,000 note was issued during 2016.
- Common stock was repurchased.