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Selected Transactions of Horner Inc

Question 109

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Selected transactions of Horner Inc. are listed below.Classify each transaction

Premises:

Responses:

Common shares are sold for cash.

an operating activity

Bonds payable are issued for cash at a discount.

an investing activity

Interest on a short-term note receivable is collected.

a financing activity

Merchandise is sold to customers for cash.

a noncash investing and financing activity

Cash is paid to purchase inventory.

Equipment is purchased by signing a 3-year, 5% note payable.

Cash dividends on common shares are declared and paid.

One hundred XYZ common shares are purchased for cash.

Land is sold for cash at book value.

Recorded an increase in the market value of available-for-sale securities.

Premises:

Common shares are sold for cash.

Bonds payable are issued for cash at a discount.

Interest on a short-term note receivable is collected.

Merchandise is sold to customers for cash.

Cash is paid to purchase inventory.

Equipment is purchased by signing a 3-year, 5% note payable.

Cash dividends on common shares are declared and paid.

One hundred XYZ common shares are purchased for cash.

Land is sold for cash at book value.

Recorded an increase in the market value of available-for-sale securities.

Responses:

an operating activity

an investing activity

a financing activity

a noncash investing and financing activity

Correct Answer:

Premises:

Responses:

Common shares are sold for cash.

Bonds payable are issued for cash at a discount.

Interest on a short-term note receivable is collected.

Merchandise is sold to customers for cash.

Cash is paid to purchase inventory.

Equipment is purchased by signing a 3-year, 5% note payable.

Cash dividends on common shares are declared and paid.

One hundred XYZ common shares are purchased for cash.

Land is sold for cash at book value.

Recorded an increase in the market value of available-for-sale securities.