BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

Solutions

Chapter
Section
BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
21 views

Exercise 1-34 Business Activities

Bill and Steve recently formed a company that manufactures and sells high-end kitchen appliances. The following is a list of activities that occurred during the year.

  1. Bill and Steve each contributed cash in exchange for common stock in the company
  2. Land and a building to be used as a factory to make the appliances were purchased for cash.
  3. Machines used to make the appliances were purchased for cash.
  4. Various materials used in the production of the appliances were purchased for cash.
  5. Three employees were paid cash to operate the machines and make the appliances.
  6. Running low on money, the company borrowed money from a local bank.
  7. The money from the bank loan was used to buy advertising on local radio and television stations.
  8. The company sold the appliances to local homeowners for cash.
  9. Due to extremely high popularity of its products, Bill and Steve bum another factory building on its land for cash.
  10. The company paid a cash dividend to Bill and Steve

Required:

Classify each of the business activities listed as either an operating activity (0). an investing activity (I), or a financing activity (F).

To determine

Concept Introduction:

Cash Flow statement:

The Cash flow statement shows the movement of cash during a particular period. The Cash flows are categorized into three categories as follows:

  • Operating Activities: Operating Activities are day to day business transactions, for example sales purchase etc.
  • Investing Activities: Investing Activities belong to the sale or purchase of assets or investments of a business. For example sales of fixed assets etc, purchase of investments.
  • Financing Activities: Financing Activities includes the transactions related to raising business finds through equity or debts. For example, issuance of shares and payment of dividend to shareholders.

To Indicate:

The type of the activity for each of the given activity.

Explanation

The type of the activity for each of the given activity is explained as follows:

    Activity Type of activity
    a.FContribution by investors is a financing activity
    b.IPurchase of property is an Investing activity for the business
    c.IPurchase of machinery is an Investing activity for the business
    d.OCash payment to suppliers is an operating activity for the business
    e...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What is meant by an organizations technology infrastructure?

Principles of Information Systems (MindTap Course List)

Define IPM.

Precision Machining Technology (MindTap Course List)

Write a function named Weight that when called in the command window will compute the weight in pound force bas...

Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)

What is meant by the term the soft side of implementing change?

Principles of Information Systems (MindTap Course List)

Identify the following symbols.

Electric Motor Control

In Sample Problem 5.5, compute the tension TAD using one scalar equilibrium equation.

International Edition---engineering Mechanics: Statics, 4th Edition

What else can shorten the battery life on a mobile computer or device?

Enhanced Discovering Computers 2017 (Shelly Cashman Series) (MindTap Course List)