Watson Corporation, which uses ASPE, is using the indirect method to prepare its 2014 statement of cash flows. A list of items that may affect the statement follows:
(a) Increase in accounts receivable
(b) Decrease in accounts receivable
(c) Issue of shares
(d) Depreciation expense
(e) Sale of land at carrying amount
(f) Sale of land at a gain
(g) Payment of dividends charged to retained earnings
(h) Purchase of land and building
(i) Purchase of long-term investment in bonds, reported at amortized cost
(j) Increase in accounts payable
(k) Decrease in accounts payable
(l) Loan from bank by signing note payable
(m) Purchase of equipment by issuing a note payable
(n) Increase in inventory
(o) Issue of bonds
(p) Retirement of bonds
(q) Sale of equipment at a loss
(r) Purchase of corporation's own shares
(s) Acquisition of equipment using a capital/finance lease
(t) Conversion of bonds into common shares
(u) Goodwill impairment loss
Match each code in the list that follows to the items above to show how each item will affect Watson's 2014 statement of cash flows. Unless stated otherwise, assume that the transaction was for cash.
Code Letter ............ Effect
A ....................... Added to net income in the operating section
D ....................... Deducted from net income in the operating section
R-I ..................... Cash receipt in investing section
P-I ..................... Cash payment in investing section
R-F ..................... Cash receipt in financing section
P-F ..................... Cash payment in financing section
N ....................... Non-cash investing and/or financing activity disclosed in notes to the financial statement