Question

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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:

1. Retired $500,000 of bonds, on which there was $4,000 of unamortized discount, for $510,000.
2. Sold 20,000 shares of $5 par common stock for $30 per share.
3. Sold equipment with a book value of $68,900 for $72,400.
4. Purchased land for $825,000 cash.
5. Purchased a building by paying $30,000 cash and issuing a $570,000 mortgage note payable.
6. Sold a new issue of $400,000 of bonds at 98.
7. Purchased 10,000 shares of $10 par common stock as treasury stock at $22.50 per share.
8. Paid dividends of $1.25 per share. There were 1,000,000 shares issued and 180,000 shares of treasury stock.

	Effect	Amount
a.	Cash payment	$
b.	Cash receipt	$
c.	Cash receipt	$
d.	Cash payment	$
e.	Cash payment	$
f.	Cash receipt	$
g.	Cash payment	$
h.	Cash payment	$

Answer 1

Answers

	Effect	Amount
a.	Cash payment	$510,000
b.	Cash receipt [20000 x $30]	$600,000
c.	Cash receipt	$72,400
d.	Cash payment	$825,000
e.	Cash payment	$30,000
f.	Cash receipt [400000 x 98/100]	$392,000
g.	Cash payment [10000 x $ 22.50]	$225,000
h.	Cash payment (820000 shares x $ 1.25)	$1,025,000