Exercise 23-1 Red Hot Chilil Peppers Co. had the following activity in its most

Question

Exercise 23-1 Red Hot Chilil Peppers Co. had the following activity in its most recent year of operations. Classify the items as (1) operating-add to net income; (2) operating-deduct from net income; (3) investing; (4) financing; or (5) significant noncash investing and financing activities. Use the indirect method. Items (a) Purchase of equipment. (b) Redemption of bonds payable. (c) Sale of building. (d) Depreciation. (e) Exchange of equipment for furniture. (f) Issuance of common stock. (9) Amortization of intangible assets (h) Purchase of treasury stock (1) Issuance of bonds for land. 0) Payment of dividends. (k) Increase in interest receivable on notes receivable. (1) Pension expense exceeds amount funded Question Attempts: 0 of 3 used

Explanation / Answer

(a) Investing (b) Financing (c.) Investing (d) Operating - add to net income (e.) Significant noncash Investing and financing activity (f) Financing (g) Operating - add to net income (h) Financing (i) Significant noncash Investing and financing activity (j) Financing (k) Operating - deduct from net income (l) Operating - add to net income

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