please choose the right answer and explain why Harry Corporation had the followi

Question

please choose the right answer and explain why

Harry Corporation had the following transactions during 2017. The company follows ASPE. For each transaction, identify whether the transaction should be considered a cash flow from operating, investing, or financing activities, or whether the transaction is not a cash activity. (a) Issued common shares for $100,000 cash (b) Issued $22,000 worth of common shares in exchange for equipment (c) Collected $52,000 cash for services rendered (d) Purchased shares in another company as a long-term investment for $18,000 cash. (e) Collected $9,000 of accounts receivable () Paid $14,000 of accounts payable. (9) Declared and paid a cash dividend of $12,000. (h) Sold a long-term investment with a cost of $18,000 for $18,000 cash. (i) Purchased a machine for $35,000 by giving a long-term note in exchange. (i) Exchanged land with a fair value of $20,000 for equipment with a fair value of $20,000Not a cash transaction Financing activity Not a cash transaction Operating activity Financing activity Operating activity Operating activity Financing activity Investing activity Not a cash transaction

Explanation / Answer

Operating activities: All activities in Income Statement(Revenues and expenses) and changes in current assets and current liabilities (Accounts receivable , payable, inventory etc) Investing Activities:Activities related to non current assets(does not include interest portion of long term loan) Financing Activities:Activities related to long term liabilities and owners equity Reason (a) Issued Common Shares for $10,000 Cash Financing Activity There is cash flow related to owners equity (b) Issued $22,000 worth of shares in exchange for equipment Not a cash transaction Issue of sahres is Financing activity , equipment investing activity. But there is no cash flow c) Collected $52,000 cash for services rendered Operating Activity Cash flow related to revenue (d) Purchased shares in another company as a long term investment for $18,000 cash Investing Activity Cash Flow related to non current asset(long term investment) (e) Collected $ 9000 of accounts receivable Operating Activity Cash flow related to change in current assets (f) Paid $14,000 of accounts payable Operating Activity Cash flow related to change in current liabilities (g) Declared and paid a cash dividend 0f $12,000 Financing Activity Cash flow related to owners equity(reduction of retained earnings) (h) Sold a long term investment with cost of $18,000 for $18,000 cash Investing Activity Cash Flow related to non current asset(long term investment) (i) Purchased a machine for $35,000 by giving a long term note in exchange Not a cash transaction Purchasing machine is investment activity and long term note issue is financing activity. However, there is no cash flow involved (j) Exchanged land with a fair value of $20,000 for equipment with a fair value of $20,000 Not a cash transaction Sale of land and investment in equipments are investing activities(non current assets) . However, there is no cash flow

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