The purchase of merchandise, the sale of goods and services to customers, and expenditures to operate the business are all reported on the statement of cash flows under activities.

Operating Activities

Explanation: The cash flow statement lists 3 activities: The operating activities which is the most important 1. It lists cash receipts, adjustments to net income plus depreciation, gain or loss on a fixed asset and changes in current assets and liabilities. The investing activities lists the purchase and sale of fixed assets. Finally, the finance activities focuses on paying its liabilities which can be issuing shares of stock, paying dividends, and receiving a long-term note payable.

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Journal Entries

2018

Feb. 1 Debit 6% Note Receivable (Candace Smith) $12,000

Credit Cash $12,000

To record receipt of a one-year, 6% note.

Apr. 6 Debit 12% Note Receivable (Park Pro) $6,000

Credit Sales Revenue $6,000

To record receiving a 90-day, 12% note.

Apr. 30 Debit Interest Receivable $230

Credit Interest Revenue $230

To accrue interest revenue for both notes.

Explanation:

a) Data and Analysis:

2018

Feb. 1 6% Note Receivable (Candace Smith) $12,000 Cash $12,000

a one-year, 6% note.

Apr. 6 12% Note Receivable (Park Pro) $6,000 Sales Revenue $6,000, receiving a 90-day, 12% note

Apr. 30 Interest Receivable $230 Interest Revenue $230

($12,000 * 6% * 3/12) + ($6,000 * 12% * 25/360)

= $180 + $50

= $230