QUESTION 1Denver Company prepares its statement of cash flows using the direct method and engaged in the following transactions during 2017:Transaction 1. Denver retired bonds payable by issuing common stock.Transaction 2. Denver collected cash for sales to customer.Transaction 3. Denver issued a stock dividend.Transaction 4. Denver paid a cash dividend.Transaction 5. Denver paid the principal of a long-term note payable. Which of these transactions or parts of these transactions would be included in the operating activity section of the statement of cash flows? Transaction 2 Transaction 5 Transaction 4 None of these choices is correct.

Issue of cash dividend is a financial activity. Stock dividend is not involved any cash…

Answered: Denver Company prepares its statement…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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QUESTION 1

Denver Company prepares its statement of cash flows using the direct method and engaged in the following transactions during 2017:

Transaction 1. Denver retired bonds payable by issuing common stock.

Transaction 2. Denver collected cash for sales to customer.

Transaction 3. Denver issued a stock dividend.

Transaction 4. Denver paid a cash dividend.

Transaction 5. Denver paid the principal of a long-term note payable.

Which of these transactions or parts of these transactions would be included in the operating activity section of the statement of cash flows?

Transaction 2

Transaction 5

Transaction 4

None of these choices is correct.

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