4. I 8. O
Be. 205
Classify each of these cash flows as Operating inflow (OI), Operating outflow (OO), Investing inflow (II), Investing outflow (IO), Financing inflow (FI), or Financing outflow (FO).
_____ 1. Collected cash from customers on account
_____ 2. Repaid bank loan principle
_____ 3. Issued common stock
_____ 4. Purchased equity investments
_____ 5. Sold equipment
_____ 6. Paid dividends on common stock
_____ 7. Issued shares of common stock
_____ 8. Paid SEO consultant for digital marketing plan
Ans: N/A, LO: 3, Bloom: C, Difficulty: Easy, Min: 5, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
Solution 205
1. OI 5. II
2. FO 6. FO
3. FI 7. FI
4. IO 8. OO
Be.206
Reardon Dental Services recorded the following cash transactions for the year:
Paid $255,000 for employee salaries.
Paid $77,000 to purchase equipment.
Paid $46,000 for other operating expenses.
Paid $48,000 for rent.
Sold investments for $3,400.
Paid $78,000 in dividends.
Collected $725,000 from patients.
Borrowed $126,000 from the bank.
What was the company’s (a) net cash provided (used) by investing activities and (b) net cash provided (used) by financing activities?
Ans: NA LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting
Solution 206
Investing cash flows = ($77,000) cash outflow to purchase equipment + $3,400 cash inflow from sale of investments = $73,600 cash used
Financing cash flows = $126,000 cash inflow from bank borrowing – ($78,000) cash outflow for dividend = $48,000 cash provided
EXERCISES
Ex. 207
Prepare an income statement and a retained earnings statement, for the month of October 2022 and a balance sheet at October 31, 2022 for the medical practice of Linda Denny, MD, from the items listed below.
Retained earnings (October 1) $15,000