Question

Selected transactions of Eller Company are listed below.

    1.    Ordinary shares are sold for cash above par value.

    2.    Bonds payable are issued for cash at a discount.

    3.    Interest receivable on a current note receivable is collected.

    4.    Land is sold for cash at book value.

    5.    Accounts payable are paid in cash.

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

    7.    Cash dividends on ordinary shares are declared and paid.

    8.    100 shares of XYZ ordinary shares are purchased for cash.

    9.    Merchandise is sold to customers for cash.

10.    Bonds payable are converted into ordinary shares.

Instructions

Classify each transaction as either (a) an operating activity, (b) an investing activity, (c) a financing activity, or (d) a non-cash investing and financing activity.

Answer 1

a.)

Operating Activivity

3. Interest recievable on a current note recievable is collected

5. Accounts payable are paid in cash

9. Merchandise is sold to customers for cash

b)

Financing Activity

1. Ordinary shares are sold for cash above par value

2. Bonds payable are issue for cash at a discount

7. Cash dividends on ordinary shares are declared and paid

c )

Investing Activity

4. Land is sold for cash at book value

5. 100 shares of XYZ ordinary shares are purchased for cash

d )

Non-Cash investing and financing activity

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

10. Bonds payable are converted into ordinary shares