Question

Classify each transaction as either an operating activity, an investing activity, a financing activity, or a noncash investing and financing activity. 1. Common stock is sold for cash above par value. Select an option 2. Bonds payable are issued for cash at a discount. Select an option 3. Interest on a short-term note receivable is collected. Select an option 4. Merchandise is sold to customers for cash. Select an option 5. Cash is paid to purchase inventory. Select an option 6. Equipment is purchased by signing a 3-year, 10% note payable. Select an option 7. Cash dividends on common stock are declared and paid. Select an option 8. One hundred shares of Amazon common stock are purchased for cash. Select an option 9. Land is sold for cash at book value. Select an option 10. Bonds payable are converted into common stock.

Answer 1

Answer

1. Common stock is sold for cash above par value. (Financing Activity)

2. Bonds payable are issued for cash at a discount. (Financing Activity)

3. Interest on a short-term note receivable is collected. (Investing Activity)

4. Merchandise is sold to customers for cash. (Operating Activity)

5. Cash is paid to purchase inventory. (Operating activity)

6. Equipment is purchased by signing a 3-year, 10% note payable. (Financing Activity)

7. Cash dividends on common stock are declared and paid. (Financing activity)

8. One hundred shares of Amazon common stock are purchased for cash. (Investing Activities)

9. Land is sold for cash at book value. (Investing Activity)

10. Bonds payable are converted into common stock. (Non cash Investing & Financing Activity)