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Listed below are the various activities included in the cash flow statement, followed by a list of transactions. Match each transaction to its related activity by placing the appropriate letter in the space provided.

O – Operating
I – Investing
F – Financing
N - Not a cash transaction

________1. Payment of interest
________2. Issuing of common shares for cash
________3. Principle repayments on long-term debt
________4. Purchase of capital assets
________5. Collection of accounts receivable
________6. Purchase of inventory
________7. Payment of cash dividends
________8. Receipt of interest from loan receivable
________9. Amortization expense
________10. Payment of salaries
Haynes Company had the following transactions during the year:

Net Loss ($36,000)
Amortization $28,000
Increase in accounts receivable $35,000
Decrease in inventories $14,500
Increase in accounts payable $34,000
Decrease in income taxes payable $6,700
Decrease in wages payable $1,800
Proceeds on Sale of Equipment $380,000
Repayment of bonds $250,000
Issuance of Common shares $100,000
Proceeds on sale of land $150,000
Gain on sale of land $20,000
Payment of dividends $10,000

a. Determine the cash flows from operations
b. Determine the cash from investing activities
c. Determine the cash from financing activities
d. Assuming the companies opening cash balance was $34,000, determine the cash at the end of the year.
Jim Mers is considering investing in Dayton Inc. Dayton is an information systems company that is currently heavily involved in the development of a variety of programs to facilitate the implementation of e-commerce for small to medium sized businesses. When reviewing Dayton's financial statements, Jim noticed that the company seems to have an unusually high cash balance. He is a little concerned that management may have been manipulating cash flows to impress potential investors. Jim is wondering if it is even possible to manipulate cash, and if so, what should he look for to help him determine if management is trying to manipulate the cash balance?


Write a memo to Jim addressing his concerns.
Information for Hopper Ltd. for 2009 was as follows:

(a) On December 31, 2009, sold an operational asset with a carrying value of $8,000 for $5,000 cash resulting in a $3,000 loss on the sale.
(b) Amortization expense for 2009 was $4,000.
(c) Sold 200 common shares at $10 cash per share.
(d) Paid $10,000 on a long-term note payable.
(e) Sold a long investment costing $400 for $500 cash.
(f) Inventory increased $2,500.
(g) Net income fro the year was $125,000.
(h) The company paid dividends of $24,000 during the year and incurred $3,500 in interest expense.


1. What was net cash inflow (outflow) from investing activities for 2009? Show computations.
2. What was net cash inflow (outflow) from financing activities for 2009? Show computations.
Eagle Inc. is a manufacturer of fine wood furniture. For each of the following, specify whether the item should be classified as an operating, financing, or investing cash flow, (or whether it would not be reported on the cash flow statement) whether the item represents a cash inflow or outflow, and the amount of the transaction. Explain your reasoning.

  1. Eagle paid $250,000 to repurchase some of its own shares back from shareholders.
  2. Eagle paid suppliers $2,450,000 during the year for raw materials that it uses to make furniture.
  3. Eagle reported an amortization expense of $150,000.
  4. Eagle paid $51,000 for electricity during the year.
  5. Eagle paid consultants $75,000 for a report on how to improve the efficiency of its operations.
  6. Eagle paid dividends to shareholders totaling $200,000.
  7. Eagle purchased new manufacturing facility for $1,000,000. The seller of the facility took back a mortgage on a property.
  8. Eagle’s employees were used to get the new manufacturing facility ready for use. $100,000 in employee wages were capitalized as part of the cost of the new facility.
  9. Eagle paid $11,000 in interest on its bank loan.
Bengal Company purchased a piece of land in 2001 for $1,200,000. At the end of 2007 the land was appraised and valued at $2,000,000. In 2008, due to water quality issues Bengal Company sold the land for $550,000. On its 2008 income statement and cash flow statement how should the company record this sale transaction?
Cardinal Limited had the following transactions during the year:

Proceeds from the sale of land $1,000,000
Gain on the sale of land $500,000
Proceeds from the issue of common shares $8,000,000

What was the cash from investing activities?
Which is more important to shareholders of Rogers’ Communications; cash flow or income? Please explain.
Steeler Inc. had the following events occur in 2009. Calculate the cash receipts or cash disbursements for each event.
a. Taxes Payable on January 1 was $12,400 and on December 31 was $13,600. Income Tax Expense on the income statement was reported at $39,000.
b. Cost of goods sold on the income statement was reported at $50,000. Accounts Payable increased $5,000 and Inventory decreased $7,000.
c. Sales were reported on the income statement at $100,000. Accounts Receivable increased $5,700.
d. Interest Revenue on the income statement was reported at $12,000. Interest Receivable decreased $3,600.
e. Salary Expense on the income statement was reported at $55,000. Salary Payable increased $3,900.
Why is the cash flow statement of interest to investors, creditors, and management?

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