Use this information to answer the following question. Northbrook Corporation is preparing a statement of cash flows.The following transactions occurred during the year:
1)Sold machinery for $9,000 cash.
2)Purchased a building for $80,000 cash.
3)Issued $70,000 worth of stock to acquire an airplane.
4)Converted long-term bonds by issuing $100,000 worth of stock.
5)Declared and paid a $10,000 cash dividend.
-Transaction 4 would be found on the statement of cash flows in the
A)cash flows from investing activities section.
B)cash flows from operating activities section.
C)cash flows from financing activities section.
D)noncash investing and financing transactions section.

Question

Quizplus · Accepted Answer

Transaction 4 involves converting long-term bonds into stock, which is a noncash transaction. It affects financing activities but does not involve cash flow, thus it is reported in the noncash investing and financing transactions section of the statement of cash flows.

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