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ACTIVITY 48 Purpose: Kristin Incorporated is preparing her financial statements. For each transaction, record the effect on the financial statements, including the amount of change and the title of the account. Record increases as a positive amount and decreases as a negative. For the Statement of Cash Flows, also identify whether the amount would be reported as an Operating, Investing, or Financing activity by circling O, 1, or F. A portion of Q1 is completed for you. OPERATING, INVESTING, OR FINANCING? Identify operating, investing, and financing activities. Identify cash inflows and outflows. Understand the difference between cash-based and accrual-based accounting. Financial Statement Q1 Sell $2,000 of inventory to customers for $5,000 cash. $ 5,000 Statement of cash flows Income statement $ Income statement $ Income statement $ (0/1/F) Cash from customers Sales revenue Cost of goods sold Gross profit Q2 Sell equipment with a book value (carrying value) of $65,000 for $50,000 cash. (0/I/F) Statement of cash flows Income statement Kristin Incorporated $ $ Income statement Balance sheet Balance sheet Statement of Cash Flows Q3 Borrow $100,000 from a bank at an annual interest rate of 7%. The note is due in three years. $ (0/1/F) Amount Statement of cash flows Income statement Balance sheet 04 Issue 1,000 shares of $100 par, 6%, preferred stock for $180 per share. $ Statement of cash flows (0/I/F) $ $ $ $ Income statement Balance sheet Balance sheet Q5 Receive a bill for $60,000 from a supplier. Pay $6,000. Statement of cash flows Income statement Balance sheet 06 Sell 500 shares of Microsoft common stock for $12,000 cash, originally acquired for $5,000. Statement of cash flows $ (0/I/F) Income statement LA $ $ $ Account Title Q7 Purchase equipment for $50,000 cash down and a $150,000 long-term note payable. Statement of cash flows $ (0/1/F) $ $ $ (0/1/F) Page 145 Equipment Note Payable Chapter 5

OPERATING, INVESTING, OR FINANCING? Activiry 48 Identify operating, investing and financing octivities. identify cosh inflows and outflown. Understand the difference between cash-based and accrual-based actounting. wistin incorporated is preparing her financial statements. for each transaction, record the effect on the financial statements, including the amount of chareve and the tisle of the account. Record increases as a positive amount and decreases as a necothe. for the statement of Cash flows, also identify whether the amount would be reported

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