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Each of these items must be considered in preparing a statement of cash flows for Carla Vista Co. for
2025.
For each item, state how it should be shown in the statement of cash flows for 2025.
a.
Issued bonds for \($270,000 cash.
b.
Purchased equipment for $\)243,000 cash.
C.
Sold land costing \($27,000 for $\)27,000 cash.
d.
Declared and paid a $67,500 cash dividend.

Verified Answer :

GinnyAnswer

Sure, let's examine each of the provided items and determine how they should be presented in the statement of cash flows for Carla Vista Co. for the year 2025.

### a. Issued bonds for \($270,000 cash. When a company issues bonds, it is essentially borrowing money from investors and agreeing to pay them back with interest over time. This activity falls under financing activities in the statement of cash flows because it relates to how the funds are raised for the business, typically through debt or equity. - Statement of Cash Flows: Report as an increase in cash flows from financing activities. - Amount: $\)270,000

### b. Purchased equipment for \($243,000 cash. Purchasing equipment represents an investment by the company into its fixed assets. This type of transaction falls under investing activities, which include transactions involving the acquisition or disposal of long-term assets such as equipment, buildings, or land. - Statement of Cash Flows: Report as a decrease in cash flows from investing activities. - Amount: $\)243,000

### c. Sold land costing \($27,000 for $\)27,000 cash.
Selling land is also considered part of investing activities because it involves the disposal of a long-term asset. In this case, the company receives cash from selling the land.

- Statement of Cash Flows: Report as an increase in cash flows from investing activities.
- Amount: \($27,000 ### d. Declared and paid a $\)67,500 cash dividend.
Paying dividends to shareholders is related to the company's financing activities because it pertains to the return on shareholders' equity. Dividends are typically viewed as distributions of profits to a company's shareholders.

- Statement of Cash Flows: Report as a decrease in cash flows from financing activities.
- Amount: $67,500

By identifying and categorizing each of these transactions, you will ensure accurate reporting in the statement of cash flows for Carla Vista Co. for the year 2025, aiding in a clear and transparent presentation of how the company has managed its cash inflows and outflows.

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