Polk Co. acquires a forklift from Quest Co. for $30,000. The terms require Polk to pay $3,000 down and finance the remaining $27,000. On March 1, year 1, Polk pays the $3,000 down and accepted delivery of the forklift. Polk signed a note that requires Polk to pay principal payments of $1,000 per month for 27 months beginning July 1, year 1. What amount should Polk report as an investing activity in the statement of cash flows for the year ended December 31, year 1?
Down payment of $3,000 to acquire Forklift will be reported as cash flows from investing activity. $6,000 paid over six months towards principal payments will be reported as uses of cash for financing activities as repaying a loan is a part of financing activities.