Classifying and Analyzing Business Activities CTT Ltd. reported the following business activities during 2018:

a. Purchased property, plant, and equipment for cash

b. Purchased merchandise inventory for cash

c. Recorded depreciation on property, plant, and equipment

d. Issued common shares

e. Purchased merchandise inventory on credit

f. Collected cash sales from customers *

g. Paid cash dividends h. Purchased a two-year insurance policy i. Paid salaries of employees j. Borrowed cash by issuing a note payable k. Sold property, plant, and equipment for cash 1. Paid cash for principal amount of mortgage m. Paid interest on mortgage

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1. Indicate whether each activity should be classified as a cash flow from operating activities, a cash flow from investing activities, a cash flow from financing activities, or a noncash investing and financing activity. Assume that CTT uses the indirect method.

2. For each activity that is reported on the statement of cash flows, indicate whether it produces a cash inflow, produces a cash outflow, or has no cash effect.

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Problem