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The Following Transactions Occurred During the Year for XYZ Corporation

Question 126

Essay

The following transactions occurred during the year for XYZ Corporation:
(a.) During the year, trading securities were purchased for $250,000.
(b.) During the year, securities available for sale were purchased for $80,000.
(c.) During the year, trading securities that are carried on the balance sheet at their fair value of $125,000 were sold for $125,000 cash.
(d.) At the end of the year, the trading securities portfolio has an aggregate fair value of $142,000 and an aggregate cost of $150,000.
(e.) At the end of the year the securities available for sale portfolio has an aggregate fair value of $95,000.
Required:
Indicate how each of these transactions would affect the statement of cash flows for a corporation. Assume the statement of cash flows is prepared using the indirect method. Each transaction is assumed to be independent of the other transactions.

Correct Answer:

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(a.) The $250,000 cash payment for tradi...

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