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Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition by Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt

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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. ...

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