Classification of Activities For each of the following transactions reported on a statement of cash flows, indicate whether it would appear in the Operating Activities section (O), in the Investing Activities section (I), or in the Financing Activities section (F). Put an S in the blank if the transaction does not affect cash but is reported in a supplemental schedule of noncash activities. Assume that the company uses the direct method in the Operating Activities section.
1. A company purchases its own common stock in the open market and immediately retires it.
2. A company issues preferred stock in exchange for land.
3. A six-month bank loan is obtained.
4. Twenty-year bonds are issued.
5. A customer’s open account is collected.
6. Income taxes are paid.
7. Cash sales for the day are recorded.
8. Cash dividends are declared and paid.
9. A creditor is given shares of common stock in the company in return for cancellation of a long-term loan.
10. A new piece of machinery is acquired for cash.
11. Stock of another company is acquired as an investment.
12. Interest is paid on a bank loan.
13. Factory workers are paid.