MGMT FFACCh. 12 Exercises

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 YearBeginning of Year

Cash$20,000$15,000

Accounts receivable22,00032,000

Inventory72,00060,000

Accounts payable12,00018,000

Taxes payable5,0003,000

Instructions

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