Question

Each of the items below must be considered in preparing a statement of cash flows for Baskerville Co. for the year ended December 31, 2020. For each item, state how it should be shown in the statement of cash flows for 2020 if the indirect method is used.
A. Issued bonds for $150,000 cash.
B. Purchased equipment for $200,000 cash.
C. Sold land costing $50,000 for $50,000 cash.
D. Declared and paid a $20,000 cash dividend.

Answer 1

Explanation:

The categorization are as follows

A. Issued bonds for $150,000 cash. = Cash flow from investing activities. It represents an inflow of cash

B. Purchased equipment for $200,000 cash.  = Cash flow from investing activities. It represents an outflow of cash

C. Sold land costing $50,000 for $50,000 cash =  Cash flow from investing activities. It represents an inflow of cash

D. Declared and paid a $20,000 cash dividend = Cash flow from investing activities. It represents an outflow of cash