ACCT 2110 Fall 2023 (Online; 8-week) CE #5 (Ch. 11) Due: Sunday, 10/1 at 9 pm Item 1: For Entity A, classify each transaction as either an operating activity OA, an investing activity IA, or a financing activity FA, or a noncash investing and financing activity NC. Selected transactions for Entity A are listed below. _____

1. Cash received from issuing Entity A common stock to investors. _____

2. Cash paid for merchandise inventory for resale. _____

3. Cash collections from customers. _____

4. Cash paid for land to construct a warehouse used in the business. _____

5. Cash paid to stockholders as dividends on common stock. _____

6. Acquisition of equipment by issuing a long-term note payable to the seller. _____

7. Interest paid on a long-term note payable. _____

8. Exchange of a patent for a building. _____

9. Payoff of bonds payable at maturity. _____

10. Sale of Ford common stock held as a long-term investment.

Item 2: Entity B reported net income of $12,000 for the current year.

Depreciation recorded on buildings and equipment amounted to $45,000 for the year. Balances of needed current asset and current liability accounts at the beginning and end of the year are as follows.

Be sure to compute the change by subtracting the beginning of year balance from the end of year balance.

End of Year Beginning of Year Change Accounts receivable 55,000 85,000 30,000 dec Inventory 19,000 15,000 _____ Prepaid insurance 6,000 0 _____ Accounts payable 12,000 14,000 _____ Taxes payable 14,500 8,000 _____

Also, a loss on the sale of retired painting equipment of $3,500 was reported. Instructions: Compute the changes in the accounts for each year and then prepare the cash flows from the operating activities section of the statement of cash flows using the indirect method. Net income 12,000 Adjustments to reconcile net income to cash flow from operating activities