George Corp

question 52

Essay

George Corp.'s policy is to report all cash inflows from interest and dividends in the investing section and cash outflows arising from interest and dividends in the financing section. Angela's activities for the year ended December 31, 2019 included the following:
• Declared a $12,000 cash dividend payable on January 15, 2020.
• Acquired the right to use an automobile costing $30,000 under a lease agreement.
• Declared and issued a stock dividend valued at $15,000.
• Issued $330,000 in ordinary shares.
• Accounts payable increased $18,000 during the year.
• Paid $980,000 to repurchase bonds. The book value of the bonds was $1,010,000.
• Made a $15,000 principal payment on a bank loan.
• Interest expense for the period was $8,000. The interest payable account increased
$2,000.
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.

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Definitions:

Overhead Costs

Expenses related to the day-to-day operations of a business that are not directly tied to a specific product or service, such as rent, utilities, and office supplies.

Finished Goods Inventory

The stock of completed products that are ready to be sold but have not been sold yet.

Work In Process Inventory

Components, raw materials, and labor costs associated with partially completed goods during the manufacturing process.

Direct Labor

The wages paid to workers directly involved in the production of goods or services.