Question

Each of these items must be considered in preparing a statement of cash flows for Teal Mountain Company. for the year ended December 31, 2022. For each item, state how it should be shown in the statement of cash flows for 2022.

(a) Issued bonds for $300,000 cash. Choose the type of cash inflows and outflows
(b) Purchased equipment for $270,000 cash. Choose the type of cash inflows and outflows
(c) Sold land costing $30,000 for $30,000 cash. Choose the type of cash inflows and outflows
(d) Declared and paid a $75,000 cash dividend.

Answer 1

a. Cash flow from Finance Activities - Cash Inflow $300,000.

b. Cash flow from Investment Activities - Cash Outflow $270,000.

c. Cash flow from Investment Activities - Cash Inflow $30,000.

d. Cash flow from Finance Activities - Cash Outflow $75,000.

Step-by-step explanation:

The Statement of Cash flows shows 3 types of Cash flow headings which are :

1. Cash flow from Operating Activities
2. Cash flow from Investment Activities
3. Cash flow from Financing Activities

Operating Activities are Trading activities. Investing Activities involve buy and sell of assets or investment. Finance Activities involve sourcing of finance