Cushenberry Corporation had the following transactions. 1. Sold land (cost $12,000) for $15,000. 2. Issued common stock at par for $20,000. 3. Recorded depreciation on buildings for $17,000. 4. Paid salaries of $9,000. 5. Issued 1,000 shares of $1 par value common stock for equipment worth $8,000. 6. Sold equipment (cost $10,000, accumulated depreciation $7,000) for $1,200.

Required:
For each transaction above, (a) prepare the journal entry, and (b) indicate how it would affect the statement of cash ﬂows using the indirect method.

We will record assets and expenses on the debit as they increase during the year and will record liabilities and capital on the credit side as they increase during the year or vice versa.

Sold land (cost $12,000) for $15,000.

Dr Cash 15,000

Cr Land 12,000

Cr Gain on Sale 3,000

Increase investing cash flows by 15,000. and 3000 gain will be deducted from operating activities

Issued common stock

Dr Cash 20,000

Cr Common Stock 20,000

Increase financing cash flows by 20,000

Recorded depreciation on buildings for $17,000.

Dr Depreciation Expense 17,000

Cr Accumulated Depreciation 17,000

This will not affect cash flow.

Paid salaries of $9,000.

Dr Salaries Expense 9,000

Cr Cash 9,000

Decrease operating activities cash flow by $9,000.

Issued 1,000 shares of $1 par value common stock for equipment

Dr Equipment 8,000

Cr Additional paid-in capital Common Stock 7,000

Cr Common Stock 1,000

It doesn't involve any cash however affects the company financial position so it will be recorded in schedule of non cash financing and investing activities

Sold equipment (cost $10,000, accumulated depreciation $7,000) for $1,200.

Dr Cash 1,200

Dr Accumulated Depreciation 7,000

Dr Loss on Disposal 1,800

Cr Equipment 10,000

There would be an increased cash flow of $1,200 under investing activities.