Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition

EXERCISE 13-2

Purpose: (L.O. 2) This exercise will give you practice in classifying transactions by activity.

The Wolfson Corporation had the following transactions during 2014:

1. Issued $100,000 par value common stock in exchange for cash.
2. Issued $22,000 par value common stock in exchange for equipment.
3. Sold services for $52,000 cash.
4. Purchased an investment for $18,000 cash.
5. Collected $9,000 of accounts receivable.
6. Paid $14,000 of accounts payable.
7. Declared and paid a cash dividend of $12,000.
8. Sold a long-term investment with a cost of $18,000 for $18,000 cash.
9. Purchased a machine for $35,000 by giving a long-term note in exchange.
10. Exchanged land costing $20,000 for equipment costing $20,000.
11. Paid salaries of $6,000.
12. Paid $1,000 for advertising services.
13. Paid $8,000 for insurance coverage for a future period.
14. Borrowed $31,000 cash from the bank.
15. Paid $11,000 interest.
16. Paid $31,000 cash to the bank to repay loan principal.
17. Issued $40,000 par value common stock upon conversion of bonds payable having a face value of $40,000.
18. Paid utilities of $4,000.
19. Loaned a vendor $6,000 cash.
20. Collected interest of $2,000.
21. Collected $6,000 loan principal from borrower.
22. Purchased treasury stock for $4,000.
23. Sold treasury stock for $6,000 (cost was $4,000).
24. Paid taxes of $20,000.

Instructions

Analyze each transaction above and indicate whether it resulted in a(n):

(a) inflow of cash from operating activities.

(b) outflow of cash from operating activities.

(c) inflow of cash from investing activities. ...