Among the transactions of Marvel Manufacturing were the following:
1. Made payments on accounts payable to office suppliers.
2. Paid the principal amount of a mortgage to Seventh Bank.
3. Paid interest charges relating to a mortgage to Seventh Bank.
4. Issued preferred stock for cash; management plans to use this cash in the near future to pur-chase another company.
5. Paid salaries to employees in the finance department.
6. Collected an account receivable from a customer.
7. Transferred cash from the general bank account into a money market fund.
8. Used the cash received in 4, above, to purchase Moran Manufacturing Co.
9. Made a year-end adjusting entry to recognize amortization expense.
10. At year-end, purchased for cash an advertising spot on a local radio station for the next eight months.
11. Paid the annual dividend on preferred stock.
12. Paid the semiannual interest on bonds payable.
13. Received a semiannual dividend from an investment in the common stock of another corporation.
14. Sold for cash an investment in the common stock of another corporation.
15. Received cash upon the maturity of an investment in cash equivalents. (Ignore interest.)
Instructions
Most of the preceding transactions should be included among the activities summarized in a statement of cash flows. For each transaction that should be included in this statement, indicate whether the transaction should be classified as an operating activity, an investing activity, or a financing activity.
If the transaction should not be included in the current year’s statement of cash flows, briefly explain why not. (Assume that net cash flows from operating activities are determined by the direct method.)