Item 1: Classify each transaction as either an operating activity OA, an investing activity IA, or a financing activity FA, or a noncash investing and financing activity NC. +1/2 per Selected transactions for the Entity A are listed below. _____ 1. Common stock is sold to investors for cash above par value. _____ 2. Bonds payable are issued for cash. _____ 3. Interest on a short-term note receivable is collected. _____ 4. Products and services are sold for cash to customers. _____ 5. Equipment is sold for cash at book value. _____ 6. Cash is paid to purchase inventory. _____ 7. Convertible bonds payable are converted into common stock. _____ 8. Cash dividends on Entity As common stock are declared and paid. _____ 9. Shares of Ford common stock are purchased for cash. _____ 10. Land that will be held for speculation is purchased for cash. . Item 2: Entity B reported net income of $98,000 for the current year. Depreciation recorded on buildings and equipment amounted to $30,000 for the year. Balances of needed current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of Year Change Accounts receivable 95,000 64,000 31,000 inc Inventory 41,000 44,000 Prepaid insurance 9,000 0 Accounts payable 15,500 17,000 Taxes payable 6,500 1,000

Also, a loss on the sale of land of $7,500 was reported. Instructions: Compute the changes in the accounts for each year and then prepare the cash flows from the operating activities section of the statement of cash flows using the indirect method. Net income 98,000 Adjustments to reconcile net income to cash flow from operating activites: