(Classifying transactions for a cash flow statement, LO 3) Basanti Oil Inc. (Basanti)

is a privately owned oil exploration and production company. For each of the following specify whether the item should be classified as an operating, financing, or investing cash flow, whether the item represents a cash inflow or outflow, and the amount of the transaction. Explain your reasoning.

a. Sold oil produced from its wells for $500,000.

b. Sold some drilling equipment for $175,000 cash. There was a loss of $54,000 on the sale.

c. Purchased drilling rights from the government for $250,000 cash. The rights allow the company to explore and drill for oil in a particular part of the province for the next 10 years.

d. Paid $12,000 to a service company for maintenance on some of its drilling equipment.

e. Owes the federal government $210,000 in income taxes. The amount will be paid next year.

f. Paid a dividend of $100,000 to its shareholder.
g. Paid interest on its outstanding bank loan of $20,000.