Boboto Inc

question 31

Essay

Boboto Inc.'s policy is to report all cash flows arising from interest and dividends in the operating section. Boboto's activities for the year ended December 31, 2021 included the following:
• Declared and issued a stock dividend valued at $50,000.
• Paid $46,000 to repurchase ordinary shares and cancelled them. The book value was $33,000.
• Accounts payable decreased $23,000 during the year.
• Issued $1,500,000 in bonds. The cash proceeds were $1,410,000.
• Interest expense for the period was $10,000. The interest payable account decreased $4,000.
• Made a $75,000 principal payment on a bank loan.
• Declared a $15,000 cash dividend payable on January 15, 2022.
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.

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Definitions:

Custom Furniture

Furniture that is specially designed and manufactured according to the specific requirements and preferences of a customer.

Process Costing

A costing system used in situations where a single, homogeneous product (such as cement or flour) is produced for long periods of time.

Weighted-Average Method

A cost accounting method that calculates the cost of goods sold and ending inventory based on the weighted average of all costs of goods available for sale.

Process Costing System

A method of accounting used to track and allocate costs associated with a continuous manufacturing process, suitable for homogeneous products.