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Question(s) / Instruction(s):

An analysis of comparative balance sheets, the current year's income statement, and the general ledger accounts of Gagliano Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary.

An analysis of comparative balance sheets, the current year's income statement, and the general ledger accounts of Gagliano Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary.

Instructions

Indicate how each item should be classified in the statement of cash flows using these four major classifications: operating activity (indirect method), investing activity, financing activity, and significant noncash investing and financing activity.

(a)

Payment of interest on notes payable.

(b)

Exchange of land for patent.

(c)

Sale of building at book value.

(d)

Payment of dividends.

(e)

Depreciation.

(f)

Receipt of dividends on investment in stock.

(g)

Receipt of interest on notes receivable.

(h)

Issuance of capital stock.

(i)

Amortization of patent.

(j)

Issuance of bonds for land.

(k)

Purchase of land.

(l)

Conversion of bonds into common stock.

(m)

Loss on sale of land (loss only).

(n)

Retirement of bonds.







Rachael Ray Corporation had the following transactions.

  1. Sold land (cost $12,000) for $15,000.
  2. Issued common stock for $20,000.
  3. Recorded depreciation of $17,000.
  4. Paid salaries of $9,000.
  5. Issued 1,000 shares of $1 par value common stock for equipment worth $8,000.
  6. Sold equipment (cost $10,000, accumulated depreciation $7,000) for $1,200.

Instructions

For each transaction above, (a) prepare the journal entry, and (b) indicate how it would affect the statement of cash flows. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.)


Account / Description

Debit

Credit

1. (a)

$




$

 

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