Analyze each of the four transactions Ernie’s Electronics had with Bert’s Bargain House from the perspective of Ernie's Electronics.
Required:
Select the section of the statement of cash flows in which each of these items would be reported for Ernie's Electronics: operating activities (indirect method), investing activities, financing activities, or a separate noncash activities note.
Transactions Activities 1. Ernie sold Bert land, originally purchased for $180,000, at a sales price of $195,000, resulting in a gain on sale of land of $15,000. 2. Ernie borrowed $100,000 from Bert, signing a three-year note payable. 3. Ernie purchased $1 million in common stock in Bert's Bargain House through a private placement. 4. Ernie received a dividend of $40,000 from the common stock investment in Bert's Bargain House 3.