Effect of Transactions on Cash Flows State the effect (cash receipt or payment a

Question

Effect of Transactions on Cash Flows State the effect (cash receipt or payment and amount) of each of the following transactions, considered individually, on cash flows a. Retired $500,000 of bonds, on which there was $5,000 of unamortized discount, for $525,000. b. Sold 6,000 shares of $20 par common stock for $30 per share. c. Sold equipment with a book value of $98,200 for $117,500. d. Purchased land for $322,000 cash. e. Purchased a building by paying $75,000 cash and issuing a $62,500 mortgage note payable. f. Sold a new issue of $300,000 of bonds at 101. g. Purchased 2,500 shares of $40 par common stock as treasury stock at $50 per share. h. Paid dividends of $2.00 per share. There were 50,000 shares issued and 10,000 shares of treasury stock. Effect Amount c. d. e. h.

Explanation / Answer

Effect of transactions on cash flow

Ans

NO

inflow/outflow

Amount

Calculation

1

cash inflows

$525,000

2

cash inflows

$180,000

3

cash inflows

$117,500

4

Cash outflow

$322,000

5

Cash outflow

$75,000

6

cash inflows

$303,000

300000*101/100

7

Cash outflow

$125,000

2500*50

8

Cash outflow

$80,000

(50,000-10,000)*2

Effect of transactions on cash flow

Ans

NO

inflow/outflow

Amount

Calculation

1

cash inflows

$525,000

2

cash inflows

$180,000

3

cash inflows

$117,500

4

Cash outflow

$322,000

5

Cash outflow

$75,000

6

cash inflows

$303,000

300000*101/100

7

Cash outflow

$125,000

2500*50

8

Cash outflow

$80,000

(50,000-10,000)*2

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