Reference no: EM132354300

Question

Carter Company had the following transactions throughout the year:

Inflow/ Operating/

Outflow/ Investing/

Adjust (+/-) Financing Amount

Activity N/A or N/A Recorded

1 Paid $90,000 of salaries in cash

2 Issued $100,000 of bonds for cash

3 Issued $50,000 of stock in exchange for equipment

4 Obtained a $300,000, 5% loan from the bank

5 Received a $5,000 dividend from investment in XYZ Company

 6 Purchased $22,000 of the securities of Yolo Company

7 Purchased a $70,000 building for cash

8 Paid $15,000 of interest on the note

9 Purchased $3,200 of inventory for cash.

10 Paid a $10,000 dividend to shareholders

11 Repaid $100,000 of the principal balance of the loan

12 Made $350,000 sales in cash and $180,000 of sales on account

13 Purchased a $250,000 building by paying $50,000 in cash and issuing a note for the rest

14 Sold a building with a book value of  $80,000 for $75,000 cash.

15 Sold $5,000 of the shares of Yolo Company for $4,500.

Answer the following Questions:

1. Complete the chart above by determining whether each transaction is a cash inflow/outflow/or N/A (did not impact cash), what type of activity it is (Operating, Investing, Financing or N/A) and how much, if any, we should recognize in the Statement of Cash Flows. If a transaction requires two entries on the SCF, identify the amount we should recognize under each section and whether it was an inflow, outflow, positive adjustment or negative adjustment. Assume we are using the indirect method).

2. For items 12, 13, 14 and 15 ONLY, prepare either Journal Entries or show the transactions on a Financial Statements Effects Template.