Question

Effect of Transactions on Cash Flows State the effect (cash receipt or cash payment and amount) of each of the following transactions, considered individually, on cash flows: a. Retired $320,000 of bonds, on which there was $3,200 of unamortized discount, for $333,000. b. Sold 7,000 shares of $15 par common stock for $27 per share. C. Sold equipment with a book value of $51,300 for $73,900. d. Purchased land for $436,000 cash. e. Purchased a building by paying $67,000 cash and issuing a $110,000 mortgage note payable. f. Sold a new issue of $290,000 of bonds at 97. g. Purchased 5,600 shares of $15 par common stock as treasury stock at $29 per share. h. Paid dividends of $2.40 per share. There were 33,000 shares issued and 5,000 shares of treasury stock. Effect Amount $ 333,000 Cash payment Cash receipt Cash receipt Cash payment Cash payment Cash receipt Cash payment Cash payment

Answer 1

Effect Amount a.Cash payment b Cash Receipt cCash Receipt dCash payment e Cash payment fCash Receipt g Cash payment hCash payment 333,000 189,000 73,900 $ 436,000 67,000 281,300 162,400 67,200 Working Notes: b Cash Receipt 7,000*S27 = S189,000 f Cash receipt= S290,000/100*97 S281,300 g Cash payment = 5,600*S29 = $162,400 e Cash payment (33,000-5,000)*S2.40 $67,200

Statement of Cash flows (Partial Cash flows from Operating Activities: Net Income Adjustments to reconcile Net Income to Net Cash flow from Operating activities: Depreciation expenses Changes in Current operating assets and liabilities Increase in accounts Receivables Decrease in Inventory Increase in Prepaid expenses Increase in Accounts payable Decrease in Wages payable Net Cash provided by operating activities 116,000 19,100 (1,710 2,560 (1,040) 3,070 (2,600) $135,380

Cash received from customers 239,300 Working Notes: Cash Received from customers S 225,000 Sales Add: Decrease in Accounts receivables 14,300 Cash Received from customers 239,300