Exercise 4-14 Classify cash flows (LO4-7) Below are several transactions for Wit

Question

Exercise 4-14 Classify cash flows (LO4-7) Below are several transactions for Witherspoon Incorporated, a small manufacturer of decorative glass designs. Required or each transaction, indicate (1) whether cash is involved (yes or no), and, if cash is involved, (2) whether Witherspoon should classify it as operating, investing, or financing in a statement of cash flows, and (3) whether the cash is an inflow or outflow. Enter N/A if the question is not applicable to the statement. Cash Involved? (Yes or No) Inflow or or Financing? (if cash Outflow? Transaction involved) a. Borrow cash from the bank. b. Purchase supplies on account. c Purchase equipment with cash. d. Provide services on account. e. Pay cash on account for b. above. t. Sell for cash a warehouse no longer in use. q. Receive cash on account for d. above h. Pay cash to workers for salaries.

Explanation / Answer

Transaction Cash Involved (Yes or No) Operating, Investing, or Financing (if cash involved) Inflow or Outflow? a. Yes Financing Inflow b. No N/A N/A c. Yes Investing Outflow d. No N/A N/A e. Yes Operating Outflow f. Yes Investing Inflow g. Yes Operating Inflow h. Yes Operating Outflow

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