Question

Each of these items must be considered in preparing a statement of cash flows for Irvin Co. for the year ended December 31, 2017. For each item, state how it should be shown in the statement of cash flows for 2017. (a) Issued bonds for $200,000 cash. select an option (b) Purchased equipment for $180,000 cash. select an option (c) Sold land costing $20,000 for $20,000 cash. select an option (d) Declared and paid a $50,000 cash dividend.

Answer 1

Answer& Explanation:

(a) financing activities as the cash inflow comes from third parties in exchange of the future promise to received plus interest

(b) investing activities This cash outlay is perofrm to increase the capacity to generate cash in the future

(c) investing activity the cash inflow comes form the fixed assets of the company not their main operations.

(d) financing activities as the stockholders previously contributed to the firm equity are viewed as "lenders" to the company They made a contribution and now they receive their "interest"