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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.

FINANCIAL ACCOUNTING
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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Must answer point 13-18.

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.
Transcribed Image Text: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.
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