Following are selected balance sheet accounts of Larkspur Bros. Corp. at December 31, 2017 and 2016, and the increases or decreases in each account from 2016 to 2017. Also presented is selected income statement information for the year ended December 31, 2017, and additional information.

Selected balance sheet accounts
Assets 2017 2016 Increase (Decrease)
Accounts receivable $34,200 $23,800 $10,400
Property, plant, and equipment 277,400 246,200 31,200
Accumulated depreciation—plant assets (177,000) (167,300) (9,700)

Liabilities and stockholders’ equity 2017 2016 Increase
Bonds payable $ 48,600 $45,600 $3,000
Dividends payable 8,000 5,000 3,000
Common stock, $1 par 21,900 18,800 3,100
Additional paid-in capital 9,100 3,000 6,100
Retained earnings 104,100 91,100 13,000

Selected income statement information for the year ended December 31, 2017:
Sales revenue $155,600
Depreciation 38,200
Gain on sale of equipment 14,600
Net income 31,300

Additional information:

1. During 2017, equipment costing $44,800 was sold for cash.
2. Accounts receivable relate to sales of merchandise.
3. During 2017, $20,000 of bonds payable were issued in exchange for property, plant, and equipment. There was no amortization of bond discount or premium.

Determine the category (operating, investing, or financing) and the amount that should be reported in the statement of cash flows for the following items.

(a) Payments for purchase of property, plant, and equipment.
(b) Proceeds from the sale of equipment.
(c) Cash dividends paid.
(d) Redemption of bonds payable.

                                                                              CATEGORY      AMOUNT

a) Payment for purchase PPE                              Investing            $56,000

b) Proceeds from sale of Equipment                  investing             $30,900

c) Cash Dividend paid                                          Operating          $0

d) Redemption of Bonds Payable                       Financing           $17,000

Explanation:

Payment for purchase of PPE (76,000-20,000) = $56,000

Cost ( end 2016)                                                                        246,200

Accumulated depreciation                                                        (167,300)

Carrying Amount                                                                       78,900

add Additions                                                                             76,000

Minus Depreciation                                                                    (38,200)

Disposal at C.V (44,800 - 28,500)                                            (16,300)                                      

Cost (end 2017)                                                                           277,400

Accumulated Depreciation                                                        (177,000)

Carrying Value                                                                            100,400

to fill up the missing parts of the note we use bottom up approach

for an example to get additions we say cost at the end plus disposal (cost) - opening

the $20,000 is not cash outflow or cash inflow hence payment = 56000

Proceeds from sale of equipment

gain = selling price - Carrying Value

selling price = 14600+16300 = $30,900

Cash dividend has not been paid hence the increase in dividends payable

Redemption of bond = 45600 +20000 - 48600 = $17,000

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