Purpose: (L.O. 2) This exercise will give you practice in classifying transactions by activity.
The Wolfson Corporation had the following transactions during 2014:
- Issued $100,000 par value common stock in exchange for cash.
- Issued $22,000 par value common stock in exchange for equipment.
- Sold services for $52,000 cash.
- Purchased an investment for $18,000 cash.
- Collected $9,000 of accounts receivable.
- Paid $14,000 of accounts payable.
- Declared and paid a cash dividend of $12,000.
- Sold a long-term investment with a cost of $18,000 for $18,000 cash.
- Purchased a machine for $35,000 by giving a long-term note in exchange.
- Exchanged land costing $20,000 for equipment costing $20,000.
- Paid salaries of $6,000.
- Paid $1,000 for advertising services.
- Paid $8,000 for insurance coverage for a future period.
- Borrowed $31,000 cash from the bank.
- Paid $11,000 interest.
- Paid $31,000 cash to the bank to repay loan principal.
- Issued $40,000 par value common stock upon conversion of bonds payable having a face value of $40,000.
- Paid utilities of $4,000.
- Loaned a vendor $6,000 cash.
- Collected interest of $2,000.
- Collected $6,000 loan principal from borrower.
- Purchased treasury stock for $4,000.
- Sold treasury stock for $6,000 (cost was $4,000).
- Paid taxes of $20,000.
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. ...