FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Hospitality Industry Financial Accounting by Raymond S. Schmidgall and James W. Damitio

Problem 17.1

**Problem 1**

The Westside Deli has engaged in several transactions during the year as follows:

1. Purchased a delivery van for $15,000 and paid cash.
2. Sold 100 shares of capital stock with a $5 par value per share for $10 per share.
3. Borrowed $15,000 from the local savings and loan institution on a long-term basis.
4. Paid dividends of $10,000 during the year.
5. Sold investments, with a book value of $8,000, for $6,000.
6. Purchased short-term investments (stock in a Fortune 500 company) for $4,500.
7. Repurchased fifty shares of its own capital stock for $300. Stock is to be held for possible resale.
8. Paid $5,600 of long-term debt.
9. Exchanged 100 shares of capital stock for $1,000 of long-term debt owed to First Bank.
10. Purchased vacant land for $10,000 for potential expansion two years hence.

**Required:**

Identify how each transaction would be classified for the purpose of creating a statement of cash flows.

**Please follow the format below to solve the problem:**

1. Cash Outflow
2. Investing Activity
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Transcribed Image Text:**Problem 1** The Westside Deli has engaged in several transactions during the year as follows: 1. Purchased a delivery van for $15,000 and paid cash. 2. Sold 100 shares of capital stock with a $5 par value per share for $10 per share. 3. Borrowed $15,000 from the local savings and loan institution on a long-term basis. 4. Paid dividends of $10,000 during the year. 5. Sold investments, with a book value of $8,000, for $6,000. 6. Purchased short-term investments (stock in a Fortune 500 company) for $4,500. 7. Repurchased fifty shares of its own capital stock for $300. Stock is to be held for possible resale. 8. Paid $5,600 of long-term debt. 9. Exchanged 100 shares of capital stock for $1,000 of long-term debt owed to First Bank. 10. Purchased vacant land for $10,000 for potential expansion two years hence. **Required:** Identify how each transaction would be classified for the purpose of creating a statement of cash flows. **Please follow the format below to solve the problem:** 1. Cash Outflow 2. Investing Activity
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