Your accounting firm has just been hired to perform the audit of Buck$$s Hunting Equipment, Inc. $($Buck$).$ Buck is a retailer of hunting equipment, hunting apparel and outdoor accessories. Buck$$s operations are based in Pittsburgh, PA$,$ with retail stores located in the nearby suburbs and throughout southwestern Pennsylvania. Buck is actively developing opportunities to expand its operations in the surrounding region, including construction of a new retail store in Ohio. Buck intends to complete construction and open the new store within the next $12$ months. Buck anticipates incurring significant expenses and making short term cash outlays during the construction phase of the expansion. In order to ensure that the company had sufficient resources to pay for the expansion Buck entered into a one year revolving line of credit with its bank $($the Bank$)$ on January $31,2023.$ The line of credit has a maximum borrowing capacity of $$10$ million. All amounts borrowed under the line of credit are due on January $31,2025.$

The line of credit has a maximum borrowing capacity of $$10$ million. $($This is not considered to be a large amount$).$ Individual draws on the line of credit do not contain specific maturity dates, other than the entire amount outstanding under the line of credit becomes due at the end of the one year term.

Buck had the following borrowings in $2023$

$$ On June $30,2023,$ Buck drew $$6$ million on the line of credit

$$ On July $24,2023,$ Buck paid $$4$ million to the Bank.

$$ On September $30,2023,$ Buck drew an additional $$3$ million on the line of credit

$$ On October $30,2023,$ Buck drew an additional $$1$ million on the line of credit.

$$ On December $15,2023,$ Buck paid $$4$ million to Bank related to the outstanding balance.

Assume you are the staff accountant, and you are preparing the $12/31/23$ Statement of Cash Flows and have encountered two accounting issues.

Accounting Issue $1$: What is the appropriate classification for money borrowed using the line of credit in the Statement of Cash Flows?

$1.$ Codification Reference:

$2.$ Application of Guidance:

Buck should present the Line of Credit as an

a$.$ Operating activity

b$.$ Investing Activity

c$.$ Financing Activity

d$.$ Non Cash Activity

Accounting Issue $2$: Should the amounts borrowed$/$repaid on the Line of Credit be presented showing the inflows$/$outflows separately or based upon the ending amount borrowed as of $12/31/23?$ In other words, should the presentation be:

a$.$ Cash Inflows $$10$ Million & Cash Outflows: $$8$ Million

Or

b$.$ Cash Inflows $ $2$ Million

$3.$ Codification Reference:

$4.$ Application of Guidance:

Buck should present the Line of Credit as

a$.$ Cash Inflows $$10$ Million & Cash Outflows: $$8$ Million

b$.$ Cash Inflows $ $2$ Million