Sherya Inc.'s policy is to report all cash flows arising from interest and dividends in the operating section.Sherya's activities for the year ended December 31,2018 included the following:
• Interest expense for the period was $10,000.The interest payable account decreased $4,000.
• Made a $110,000 principal payment on a bank loan.
• Declared a $15,000 cash dividend payable on January 15,2019.
• Declared and issued a stock dividend valued at $50,000.
• Paid $55,000 to repurchase ordinary shares and cancelled them.The book value was $40,000.
• Accounts payable increased $23,000 during the year.
• Issued $1,500,000 in bonds.The cash proceeds were $1,380,000.
Required:
a.Prepare the cash flows from financing activities section of the statement of cash flows.
b.Identify how the activities listed above that are not financing activities would be reported in the statement of cash flows assuming that the statement is prepared using the indirect method.

Question

Quizplus · Accepted Answer

The Answer of Sherya Inc.'s policy is to report all cash flows arising from interest and dividends in the operating section.Sherya's activities for the year ended December 31,2018 included the following:
• Interest expense for the period was $10,000.The interest payable account decreased $4,000.
• Made a $110,000 principal payment on a bank loan.
• Declared a $15,000 cash dividend payable on January 15,2019.
• Declared and issued a stock dividend valued at $50,000.
• Paid $55,000 to repurchase ordinary shares and cancelled them.The book value was $40,000.
• Accounts payable increased $23,000 during the year.
• Issued $1,500,000 in bonds.The cash proceeds were $1,380,000.
Required:
a.Prepare the cash flows from financing activities section of the statement of cash flows.
b.Identify how the activities listed above that are not financing activities would be reported in the statement of cash flows assuming that the statement is prepared using the indirect method.