MHT Enterprises entered into the following transactions during 2015: 1. Sold a piece of equipment with a

Question:

MHT Enterprises entered into the following transactions during 2015:

1. Sold a piece of equipment with a book value of $8,000 for $1,200.

2. Purchased a parcel of land for $13,000.

3. Purchased a three-year insurance policy for $9,000.

4. Issued 1,000 shares of common stock at $7 per share.

5. Collected a short-term note, including interest, in the amount of $2,500.

6. Collected $3,000 from customers that will not be earned until 2016.

7. Purchased a building in exchange for a long-term note with a face value of $15,000 (the present value of the note is $12,000).

8. Declared and paid a cash dividend of $7,000.

9. Paid $5,000 in wages.

10. Converted an outstanding receivable into a short-term note receivable that matures in February 2016.

11. Purchased $4,500 of inventory on account.

12. Wrote off an account ($500) as uncollectible (allowance method).

13. Recorded $9,000 in depreciation expense for the year.

REQUIRED:

a. The controller of MHT Enterprises is trying to explain the change in the company’s cash balance from January 1, 2015, to December 31, 2015. The controller has asked you to analyze each of the transactions.

You are to indicate whether cash was provided, used, or not affected by each transaction. If the cash balance is affected by the transaction, indicate the dollar amount of the increase or decrease. Unless otherwise indicated, assume that all transactions involve cash.

b. Classify each transaction identified in (a) as affecting cash as one of the following:

(1) An operating activity

(2) An investing activity

(3) A financing activity

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...