Question

Tabares Corporation had these transactions during 2020. Indicate whether each transaction is an operating activity, investing activity, financing activity, or noncash investing and financing activity. (a) Issued $50,000 par value common stock for cash. select a type of activity (b) Purchased a machine for $30,000, giving a long-term note in exchange. select a type of activity (c) Issued $200,000 par value common stock upon conversion of bonds having a face value of $200,000. select a type of activity (d) Declared and paid a cash dividend of $18,000. select a type of activity (e) Sold a long-term investment with a cost of $15,000 for $15,000 cash. select a type of activity (f) Collected $16,000 from sale of goods. select a type of activity (g) Paid $18,000 to suppliers.

Answer 1

Answer and Explanation:

As per the data given in the question,  the classification of the transactions are as follows

a) Issued $50,000 par value  common stock for cash  = it is a financing activity as it increased the common stock and cash which shows in the financing activity

b) Purchased a machine for $30,000, It is a Non cash investing  giving a long-term note in exchange and financing activity.  As it does not include any cash transactions

c) Issued $200,000 par value common  stock upon conversion of bonds having . It is a Non cash investing  a face value of $200,000 and financing activity as it does not involve any cash transactions

d) Declared and paid a  cash dividend of $18,000=  It is a financing activity as the dividend is deducted from the statement of stockholder equity

e) Sold a long-term investment with  a cost of $15,000 for $15,000 cash = It is an Investing activity as there is a sale of long term investment , the same is recorded in the investing activity in a positive sign because it is an outflow of cash

f) Collected $16,000 from  sale of goods . It is an operating activity as cash is collected so the same is come under the operating activity

g) Paid $18,000 to suppliers. This transaction comes under the operating activity in a negative sign