Question

Following are selected balance sheet accounts of Monty Bros. Corp. at December 31, 2020 and 2019, and the increases or decreases in each account from 2019 to 2020. Also presented is selected income statement information for the year ended December 31, 2020, and additional information.

Selected balance sheet accounts
Assets		2020			2019			Increase (Decrease)
Accounts receivable		$34,400			$23,900			$10,500
Property, plant, and equipment		279,500			247,600			31,900
Accumulated depreciation—plant assets		(179,800	)		(168,500	)		(11,300	)
Liabilities and stockholders’ equity		2020			2019			Increase
Bonds payable		$ 49,200			$45,800			$3,400
Dividends payable		8,000			4,900			3,100
Common stock, $1 par		22,100			18,800			3,300
Additional paid-in capital		8,900			3,000			5,900
Retained earnings		104,100			91,900			12,200
Selected income statement information for the year ended December 31, 2020:
Sales revenue		$155,100
Depreciation		38,000
Gain on sale of equipment		14,500
Net income		31,100

1.		During 2020, equipment costing $45,100 was sold for cash.
2.		Accounts receivable relate to sales of merchandise.
3.		During 2020, $20,200 of bonds payable were issued in exchange for property, plant, and equipment. There was no amortization of bond discount or premium.

Determine the category (operating, investing, or financing) and the amount that should be reported in the statement of cash flows for the following items.

				Activity
(a)		Payments for purchase of property, plant, and equipment.		select a kind of activity                                                          FinancingInvestingOperating		$enter a dollar amount
(b)		Proceeds from the sale of equipment.		select a kind of activity                                                          FinancingInvestingOperating		$enter a dollar amount
(c)		Cash dividends paid.		select a kind of activity                                                          FinancingInvestingOperating		$enter a dollar amount
(d)		Redemption of bonds payable.		select a kind of activity                                                          FinancingInvestingOperating		$enter a dollar amount

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Answer 1

Determine the category (operating, investing, or financing) and the amount that should be reported in the statement of cash flows for the following items.

				Activity
(a)		Payments for purchase of property, plant, and equipment. (247600-45100-279500)		Investing		77000-20200 = -56800
(b)		Proceeds from the sale of equipment. (45100-26700+14500)		Investing		32900
(c)		Cash dividends paid. (91900+31100-104100)		Financing		-18900
(d)		Redemption of bonds payable. (45800+20200-49200)		Financing		-16800