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Harley-Davidson is a leading manufacturer of heavy-weight motorcycles. For each of the following recent transactions, indicate whether net cash inflows (outflows) from operating activities, investing activities, or financing activities are affected and whether the effect is an inflow or outflow, or use No effect if the transaction has no effect on cash. (Hint: Determine the journal entry recorded for the transaction. The transaction affects net cash flows if and only if the account Cash is affected.)

Sagot :

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Answer:

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1. Purchased raw materials inventory on account.

Indication: Cash flows from financing activities (No effect)

2. Prepaid rent for the following period.

Indication: Cash flows from operating activities (Outflow)

3. Purchased new equipment by signing a three-year note.

Indication: Cash flows from investing activities (No effect)

4. Recorded an adjusting entry for expiration of a prepaid expense.

Indication: Cash flows from operating activities (No effect)

5. Recorded and paid income taxes to the federal government.

Indication: Cash flows from operating activities (Outflow)

6. Purchased investment securities for cash.

Indication: Cash flows from investing activities (Outflow)

7. Issued common stock for cash.

Indication: Cash flows from financing activities (Inflow)

8. Collected payments on account from customers.

Indication: Cash flows from operating activities (Inflow)

9. Sold equipment for cash equal to its net book value.

Indication: Cash flows from investing activities (Inflow)

10. Issued long-term debt for cash.

Indication: Cash flows from financing activities (Inflow)

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