George Corp.'s policy is to report all cash inflows from interest and dividends in the investing section and cash outflows arising from interest and dividends in the financing section.Angela's activities for the year ended December 31,2016 included the following:
• Declared a $12,000 cash dividend payable on January 15,2017.
• Acquired an automobile costing $30,000 under a finance lease.
• Declared and issued a stock dividend valued at $15,000.
• Issued $330,000 in ordinary shares.
• Accounts payable increased $18,000 during the year.
• Paid $980,000 to repurchase bonds.The book value of the bonds was $1,010,000.
• Made a $15,000 principal payment on a bank loan.
• Interest expense for the period was $8,000.The interest payable account increased
$2,000.
Required:
a.Prepare the cash flows from financing activities section of the statement of cash flows.
b.Identify how the activities listed above that are not financing activities would be reported in the statement of cash flows assuming that the statement is prepared using the indirect method.

Question

Quizplus · Accepted Answer

The Answer of George Corp.'s policy is to report all cash inflows from interest and dividends in the investing section and cash outflows arising from interest and dividends in the financing section.Angela's activities for the year ended December 31,2016 included the following:
• Declared a $12,000 cash dividend payable on January 15,2017.
• Acquired an automobile costing $30,000 under a finance lease.
• Declared and issued a stock dividend valued at $15,000.
• Issued $330,000 in ordinary shares.
• Accounts payable increased $18,000 during the year.
• Paid $980,000 to repurchase bonds.The book value of the bonds was $1,010,000.
• Made a $15,000 principal payment on a bank loan.
• Interest expense for the period was $8,000.The interest payable account increased
$2,000.
Required:
a.Prepare the cash flows from financing activities section of the statement of cash flows.
b.Identify how the activities listed above that are not financing activities would be reported in the statement of cash flows assuming that the statement is prepared using the indirect method.