Solution Manual Chapter 5 Assigned Problems

Solution Manual Chapter 5 Assigned Problems - Chapter 5...

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Chapter 5 Homework Questions EXERCISES 5–23. (a) Operating activity (b) Operating activity (c) Operating activity (d) Financing activity (e) Financing activity (f) Financing activity (g) Operating activity (h) Financing activity (i) Investing activity (j) Investing activity (k) Operating activity (l) Operating activity (m) Operating activity (n) Operating activity (o) Noncash transaction; report separately. (p) Noncash item; ignore under direct method; add back to net income un- der indirect method. (q) Investing activity (r) Investing activity 5–24. (a) The purchase of securities classified as available-for-sale is reported as cash used to acquire those securities, an investing activity. (b) The acquisition of buildings for $60,000 should be reported as a use of cash from investing activities. The balance ($150,000) is a significant noncash transaction that should be reported separately in the notes or an accompanying schedule to the statement of cash flows. (c) The purchase of business assets is reported as an investing activity as follows: Cash was used to: Purchase inventory. ............................................. $ 16,700 Purchase furniture and fixtures. ......................... 8,400 Purchase land and buildings. .............................. 20,100 Purchase goodwill. ............................................... 9,000 $54,200 Note that the entire amount of the business purchase is reported as a cash outflow from investing activities even though some of the assets ($16,700 in inventory) are operating assets. (d) The declaration of dividends is not reported as a use of cash because this had no effect on cash. When the dividend payable is paid, the cash outflow will be shown as a financing activity. (e) The decrease in Accounts Payable is reported as an item to be deduc-
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This note was uploaded on 04/12/2011 for the course ACCT 2310 taught by Professor Santoshattar during the Fall '08 term at Cuyahoga CC.

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Solution Manual Chapter 5 Assigned Problems - Chapter 5...

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