The statement of cash flows for Baldwin Company shows what happens in the Cash a

Question

The statement of cash flows for Baldwin Company shows what happens in the Cash account during the year. It can be seen as a summary of the sources and uses of cash (sources of cash are added, uses of cash are subtracted). Please answer which of the following is true if Baldwin repurchases some of its common stock: Select: 1 It is a source of cash, and will be shown in the investing section as an addition. It is a use of cash, and will be shown in the investing section as a subtraction. It is a use of cash, and will be shown in the financing section as a subtraction. It is a source of cash and will be shown in the financing section as an addition. Round C59559 Annual Report Baldwin Dec. 31, 2018 2018 Income Statement 2018 Common Tota Size $170,270 100.0% (Product Name:) Bell Bolt $0 ales $50,696 $29,150 $43,173 $47,250 ariable Costs: $14,789 $7,067 $9,315 $9.481 $20,709 $13,006 $17,208 $18,587 $778 $35,498 $20,707 $27,245 $28,846 $40,652 $69,510 $2,135 $112,297 23.9% 40.8% 1.3% 66.0% SO $0 S0 SO $635 $722 $0 otal Variable SO $0 $57,972 34.0% $15,198 $8,443 $15,928 $18,404 Costs: $7,811 $2,304 $5.200 s3.400 $1,304 $20,018 4.6% 1.4% 3.1% 2.0% 0.8% 11.8% $2,104 $1,707 $1,900 $2,100 $9 $727 S0 1,300 $1,300 1.300 $1.300 $900 $5,626 $4,139 5,058 S5,195 9,572 $4,304 $10,870 $13,208 S0 $0 $331 otal Period s0 $37,954 22.3% Sales: Unit sales times list price. Direct Labor: Labor costs incurred to produce the t that was sold. Inventory Carry Cost: the cost to carry unsold goods in inventory $7,172 $30,782 $3.154 $3,106 $8,583 $319 $15,621 4.2% 18.1% 1.9% 1.8% 5.0% 0.2% 9.2% Calculated on straight-line 15-year depreciation of plant value. R&D; Costs: R&D; EBIT overhead is estimated at 1.5% Short Term Interest promotion budget for each product. Sales: The sales force budget for Long Term Interest t expenditures for each product. Admin: Administration sales. Promotions: The product. Other: Charges not included in other categories such as Fees, Write Offs, and Taxes Profit Sharing Net Profit QM. The fees include mone y paid to investment bankers and brokerage firms to issue new or bonds plus consulting fees your instructor might assess. Write-offs include the loss you Variable Margins 2008 Baldwin t experience when you sell capacity or liquidate inventory as the result of eliminating a amount, then you actually made money on line. If the amount appears as a negative Before Interest and Taxes. Short Term liquidation of capacity or inventory. EBIT: Earnings nterest: Interest expense based on last years current debt, including short term debt, long term 30.0% that have become due, and emergency loans. Long Term Interest: Interest paid on 20.0% 10.0% bonds Taxes: Income tax based upon a 35% tax rate. Profit Sharing: Profits shared| h employees under the labor contract. Net Profit: EBIT minus interest, taxes, and profit 0.0%

Explanation / Answer

Answer;

Purchase of own shares is buy back and is considered as treasury shares.This will be reflected in the financing section of Cashflow as Subtraction since it is use of cash to purchase own shares and not shares in other company.

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