On June 3, a company borrows $200,000 cash by giving its bank a 90-day, interest-bearing note. On the statement of cash flows, where should this be reported?

Tell me the answer.

To determine where the borrowing of $200,000 cash should be reported on the statement of cash flows, we need to understand the different sections of the statement.

The statement of cash flows typically consists of three sections:

1. Operating activities: This section captures the cash flows resulting from day-to-day business operations, including revenue generation and expenses related to the core business activities.
2. Investing activities: This section highlights cash flows related to the acquisition or sale of long-term assets or investments.
3. Financing activities: This section showcases the cash flows resulting from activities like borrowing or repaying debt, issuing or buying back stock, and paying dividends.

In the given scenario, where the company borrows $200,000 cash by issuing a 90-day, interest-bearing note, it falls under the financing activities section of the statement of cash flows.

Specifically, this borrowing would be reported under the "Borrowings" or "Notes Payable" category within the financing activities section. The "Notes Payable" category indicates any short-term or long-term borrowings by the company.

Therefore, the borrowing of $200,000 cash should be reported in the financing activities section under the suitable category.