Question
Wisconsin, Inc. owed one of its creditors $350,000, but it did not have enough cash to repay the debt. Following lengthy negotiations, the parties agreed that Wisconsin, Inc. would issue 50,000 shares of common stock to settle the debt. On the statement of cash flows, this transaction is shown in the ________.
Answers
GPT-4o mini
The transaction where Wisconsin, Inc. issues shares of common stock to settle a debt would be classified as a non-cash investing and financing activity on the statement of cash flows.
Such transactions do not involve cash flow; instead, they involve an exchange of equity for a liability. While they do not appear in the main sections of operating, investing, or financing activities, they are typically disclosed in the notes or a supplementary schedule accompanying the cash flow statement.
So the complete answer would be that this transaction is shown in the **non-cash investing and financing activities section** of the statement of cash flows.
Such transactions do not involve cash flow; instead, they involve an exchange of equity for a liability. While they do not appear in the main sections of operating, investing, or financing activities, they are typically disclosed in the notes or a supplementary schedule accompanying the cash flow statement.
So the complete answer would be that this transaction is shown in the **non-cash investing and financing activities section** of the statement of cash flows.