During 2011, Oscar Company purchased some of the 90,000 shares of common stock, par $6, of Selma,

Question:

During 2011, Oscar Company purchased some of the 90,000 shares of common stock, par $6, of Selma, Inc., as a long-term investment. The annual accounting period for each company ends December 31. The following transactions occurred during 2011:
Jan. 7 Purchased 40,500 shares of Selma stock at $35 per share.
Dec. 31 a. Received the 2011 financial statement of Selma, which reported net income of $205,000.
b. Selma declared and paid a cash of $2.50 per share.
c. Determined that the current market price of Selma stock was $39 per share.

Required:
Indicate how the Operating Activities and Investing Activities sections of the cash flow statement (indirect method) will be affected by each transaction.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...