Quick question on indirect accounting?

Question

Given the following;
"Dividends of 7,000 were declared & paid during the year. New plant assets were purchased for 195,000. Also, land was purchased for cash. Plant assets were sold for 25,000 cash. Additional stock was issued for cash, and a porition of the bank loan was repaid."

Now I understand the concept, i'm just in the grey as far as adjusting each under the right business activity.

My question is would the following be the appropriate way of placing these adjustments? Thanks.

Dividends of 7,000 = -7000 cash under Financing

New Plant Assets purch. 195,000 = -195,000 cash Investing

Land purchased ( look at Balance sheet, find difference between year 06-07 which = 80,000) = -80,000 cash investment

Plant assests sold for 25,000 cash = +25,000 cash investing or is this just operating/cash?

Addtl stock (B/S sheet) Common stock, +150,000 Financing

Bank loan repaid (B/S Sheet) -30,000 Financing

Answer 1

Dividends of 7,000 = -7000 cash under Financing (Correct)

New Plant Assets purch. 195,000 = -195,000 cash Investing
(Correct - make sure this is at cost and not the nbv)

Land purchased ( look at Balance sheet, find difference between year 06-07 which = 80,000) = -80,000 cash investment - (Actually you should look at the notes to the accounts under PPE and look out for additions at cost. If this is 80k, then you're correct.)

Plant assets sold for 25,000 cash = +25,000 cash investing or is this just operating/cash? (The gross proceeds shd be under investing, but any gain/loss on disposal shd be adjusted to profit before tax in the top half of the cash flow statement)

Addtl stock (B/S sheet) Common stock, +150,000 Financing (Correct)

Bank loan repaid (B/S Sheet) -30,000 Financing (Correct)

Answer 2

send sandy an email for doing your home work -- will not give you a star but will give her a point!!!