QUESTION 2: (EFFECTS OF TRANSACTION FOR STATEMENT OF CASHFLOWS) The Channel Company uses indirect method to prepare its statement of cash flows. The list of various activities performed by the company during the year 2015 is given below: 1. Purchase of treasury stock 2. Purchase of available for sale investment 3. Sale of equipment at a loss 4. Increase in accounts payable 5. Retirement of bonds 6. Issuance of bonds 7. Decrease in accounts payable 8. Increase in inventory 9. Loan from bank by signing a note 10. Increase in accounts receivable 11. Purchase of equipment by issuing a note 12. Purchase of land and building. 13. Decrease in accounts receivable. 14. Payment of dividends. 15. Issuance of stock for cash. 16. Sale of land at a gain. 17. Depreciation expense. 18. Sale of land at book value. Required: Explain the effect of each activity on the statement of cash flows of the Channel Company for the year 2015.

QUESTION 2: (EFFECTS OF TRANSACTION FOR STATEMENT OF CASHFLOWS) The Channel Company uses indirect method to prepare its statement of cash flows. The list of various activities performed by the company during the year 2015 is given below: 1. Purchase of treasury stock 2. Purchase of available for sale investment 3. Sale of equipment at a loss 4. Increase in accounts payable 5. Retirement of bonds 6. Issuance of bonds 7. Decrease in accounts payable 8. Increase in inventory 9. Loan from bank by signing a note 10. Increase in accounts receivable 11. Purchase of equipment by issuing a note 12. Purchase of land and building. 13. Decrease in accounts receivable. 14. Payment of dividends. 15. Issuance of stock for cash. 16. Sale of land at a gain. 17. Depreciation expense. 18. Sale of land at book value. Required: Explain the effect of each activity on the statement of cash flows of the Channel Company for the year 2015.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 27BE

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