Download Problem 15-1

Problem 15-1
Indicate the transaction of Miyota Communications should be classified as an operating
activity, an investing activity, a financing activity, or should not be included in the statement
of cash flows.
a. Made payments on accounts payable to merchandise suppliers.
b. Paid the principle amount of note payable to First Bank.
c. Paid interest charges relating to a note payable to First Bank.
d. Issued bonds Payable for cash.
e. Paid salaries to employees in the finance department.
f. Collected an account receivable from customer.
g. Purchased land and building for cash.
h. Made year-end adjusting entry to recognize depreciation expense.
i. At year-end, purchased for cash an insurance policy covering the next 12 months.
j. Paid the quarterly dividend on preferred stock.
k. Paid the semiannual interest on bonds payable.
l. Received a quarterly dividend from an investment in preferred stock of another
corporations.
m. Sold for cash an investment in the preferred stock of another corporation.
Problem 15-2
The account staff of Franklin Optical has assembled the following information for the year
ended December 31, 2003:
Cash sales
$ 800,000
Credit sales
2,500,000
Collection on accounts receivable
2,200,000
Interest and dividend received
100,000
Purchases (all on account)
1,800,000
Payment on accounts payable to merchandise suppliers
1,500,000
Cash payments for operating expenses
1,050,000
Interest paid
180,000
Income taxes paid
95,000
Loans made to borrowers
500,000
Collections on loans (excluding receipts of interest)
260,000
Cash paid to acquire plant assets
3,100,000
Book value of plant assets sold
660,000
Loss on sales of plant assets
80,000
Proceeds from issuing bond payable
2,500,000
Dividends paid
120,000
Cash, Jan. 1
446,000
Cash, Dec.31
?
Prepare a statement of cash flows. Use the direct method of reporting cash flows from
operating activities.