Item 1: 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 the Entity N Company are listed below.

_____ 1. Collected accounts receivable.

_____ 2. Declared and paid dividends on common stock.

_____ 3. Sold long-term investments for cash.

_____ 4. Issued stock for equipment.

_____ 5. Repaid five year note payable.

_____ 6. Paid employee wages.

_____ 7. Converted bonds payable to common stock.

_____ 8. Acquired long-term investment with cash.

_____ 9. Sold buildings and equipment for cash.

______10. Sold merchandise to customers.

Item 2:

Entity O reported net income of $225,000 for the current year. Depreciation recorded on buildings and equipment amounted to $75,000 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of Year

Cash $20,000 $15,000

Accounts receivable 22,000 32,000

Inventory 72,000 60,000

Accounts payable 12,000 18,000

Taxes payable 5,000 3,000

Instructions

Prepare the cash flows from the operating activities section of the statement of cash flows using the indirect method.