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Lee Corporation is preparing its statement of cash flows by the indirect method.

Lee Corporation has the following items for you to consider in preparing the statement:

Identify each item as a(n):

  • Operating activity—add to net income (O+) or subtraction from net inc. (O–)
  • Investing activity—cash inflow (I+) or cash outflow (I–)
  • Financing activity—cash inflow (F+) or cash outflow (F–)
  • Activity that is not used to prepare the indirect statement of cash flows (N)

Cash Flow ItemsClassification
Payment of dividends
Gain on sale of building
Depreciation expense
Increases in merchandise inventory
Purchase of equipment
Loss on sale of land
Increase in accounts payable
Issuance of common stock
Decrease in accrued liabilities
Decrease in accounts payable