Below are several transactions for Witherspoon Incorporated, a small manufacture

Question

Below are several transactions for Witherspoon Incorporated, a small manufacturer of decorative glass designs. Required: For each transaction, indicate whether cash is Involved (yes or no), and. if cash is involved. whether Witherspoon should classify it as operating, investing, or financing in a statement of cash flows, and whether the cash is an inflow or outflow. Enter N/A if the question is not applicable to the statement. Borrow cash from the bank. Purchase supplies on account. Purchase equipment with cash. Provide services on account. Pay cash on account for b above. Sell for cash a warehouse no longer in use. Receive cash on account for d. above. Pay cash to workers for salaries.

Explanation / Answer

Cash Involved Operating, Investing or Financing Inflow or Outflow a Borrow cash from bank yes Financing Inflow b purchase supplies on account no N.A c purchase equipment with cash yes Investing Outflow d Provide service on account no N.A e pay cash on account of b above yes Operating Outflow f sell warehouse for cash nolonger in use yes Investing Inflow g receive cashon account of d above yes Operating Inflow h pay cash to worker for salary yes Operating Outflow

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