Concept explainers
Classify sustainable activities’ effect on cash flows (Learning Objectives 1, 2, & 3)
SUSTAINABILITY
The Plastic Lumber Company, Inc. (PLC) is a manufacturer that takes in post-consumer plastics (i.e., empty milk jugs) and recycles those plastics into a “plastic lumber” that can be used to build furniture, decking, and a variety of other items. Because Plastic Lumber has a strong focus on sustainability, the company managers try, whenever possible, to use recycled materials and to invest in sustainable projects.
Last year, the company engaged in several sustainable practices that have an impact on its cash flows. For each of the transactions listed below, indicate whether the transaction would have affected the operating, investing, or financing cash flows of the company. Additionally, indicate whether each transaction would have increased (+) or decreased (−) cash.
Transactions:
- 1. PLC became a minority partner in a wind-turbine project by investing $2 million in cash in the project.
- 2. A new delivery truck that uses biofuel was purchased for cash.
- 3. PLC built a new building for its manufacturing facility. The new building is LEED certified and was paid for with cash.
- 4. PLC sold plastic scrap generated by its manufacturing process.
- 5. Engineers and scientists at PLC performed research into whether another kind of post-consumer plastic not currently used in its plastics extrusion process could be used.
- 6. Throughout the year, PLC participated in several trade shows that featured green products for use by parks and recreation facilities. For each trade show. PLC incurred cash expenses for transportation, registration, meals and lodging, and booth setup.
- 7. Solar panels were installed on PLC’s administrative offices to supply part of the electricity needed for its operations. PLC paid cash.
- 8. Six Toyota Prius Hybrid automobiles were purchased for the use of the sales staff. PLC paid cash.
- 9. PLC issued common stock during the year to help finance growth.
- 10. New production equipment that is 75% more energy efficient than the old equipment was purchased for cash.
Want to see the full answer?
Check out a sample textbook solutionChapter 13 Solutions
NEW MyLab Accounting with Pearson eText -- Access Card -- for Managerial Accounting
- MGMT2023 - Financial Management 1-UWI Open Campus Stephanie Carter has been gifted a sum of $50,000 by her grandparents on completing her graduation successfully. She is a fresh finance graduate and is excited to invest some money in the capital market, for which she intends to use the gifted sum of $50,000. However, instead of committing this money to the market immediately, she decides to wait for some time, work in the field and acquire some experience before proceeding with her intended investment. She thus contemplates an extremely conservative investment in a portfolio of stocks and bonds, at the start of year 5 from now. For now, she will leave the $50,000 in a fixed deposit with the bank which promises an interest rate of 6% per annum. She will require a return of at least 9% on her stock investments and 4% on bond investments. Stephanie would have to pay 25% taxes on any interest income. Dividends will be tax-free. Stephanie's research has allowed her to narrow down on the…arrow_forwardhe Shining Stars primary school was the recent recipient of a technology grant to source and implement a school management system. The school administrator is not technology savvy and therefore sought advice from three of the board members who were knowledgeable in the information systems and technology field. One director advised the administrator to purchase an off-the-shelf solution which would allow the school to get the system configured and up and running in a short period with reasonable costs. The second advised the administrator to invest in the development of a unique system to meet the custom requirements of the school’s administration. He suggested that this would create a closer fit to the school’s needs compared to purchasing software, but will cost more. The third director suggested using an open source solution which would have little if any upfront costs but may take some time to set up. i) Identify the…arrow_forwardThis fourth, and final, project for the semester will involve the following items to turn in: 1) A statement of cash flows from information I will provide you. You can turn in the information in excel, best choice, word or hand written and scanned. All files need to be uploaded to this assignment.arrow_forward
- Hey there, I only want answers for part 4 & part 5, as I've already solved 1, 2, & 3. Expecting for a quick response. THANKS. Osama Co. is a listed company operating in the textile industry. Osama Co’s board of directors met recently to discuss a new strategy for the business. The proposal put forward was to sell all the old plant and machinery and use this fund as well as borrow from market to purchase new plant and equipment. The new plant and machinery are more productive and meet the current standard quality required by the international buyers. It is also argued that new plant is more energy efficient and environment friendly that gives more advantage when facing international competitors. The proposal stated that the funds raised from the sale of the old plant and machinery would be used to buy the new plant and machinery. New borrowing for the balance amount will be made from local bank which offered lowest rate. Since inflation is on higher side compared to last few…arrow_forwardP10-53B Determine transfer price at a manufacturer under various scenarios (Learning Objective 4) Assume the Small Components Division of Lang Manufacturing produces a video card used in the assembly of a variety of electronic products. The division's manufacturing costs, and variable selling expenses related to the video card are as follows: Cost per unit Direct materials $ 14.00 Direct labor $ 4.00 Variable manufacturing overhead $ 8.00 Fixed manufacturing overhead (at current production level) $ 9.00 Variable selling expenses $ 10.00 The Computer Division of Lang Manufacturing can use the video card produced by the Small Components Division and is interested in purchasing the video card in-house rather than buying it from an outside supplier. The Small Components Division has sufficient excess capacity with which to make the extra video cards. Because of competition, the market price for this video card is $30 regardless of whether the…arrow_forwardBudgeting is important not only for businesses. Also in our personal lives we have scarce resources, especially money and time, but also other resources like for example cell phone data, use of the family computer or family TV set, access to childcare etc. Our college prepares annual budgets as well. please look at line items 18 and 21. What do these dollar amounts tell you? What are your conclusions for the college? Share your observations with the class and discuss possible reasons for your observations.arrow_forward
- A company manufacturing high precision polycarbonate plastic lenses wants to expand its manufacturing operations. The company is financially reasonably sound and has sufficient funds for the expansion. For purchase of machinery, the management has two options Option 1: Purchase new machinery by taking a bank loan Option 2: Purchase second-hand used machinery by utilizing its own funds Is it advisable for the company to purchase used equipment / machinery? What are the sources of used equipment / machinery?arrow_forwardThe Shining Stars primary school was the recent recipient of a technology grant to source and implement a school management system. The school administrator is not technology savvy and therefore sought advice from three of the board members who were knowledgeable in the information systems and technology field. One director advised the administrator to purchase an off-the-shelf solution that would allow the school to get the system configured and up and running in a short period with reasonable costs. The second advised the administrator to invest in the development of a unique system to meet the custom requirements of the school’s administration. He suggested that this would create a closer fit to the school’s needs compared to purchasing software, but will cost more. The third director suggested using an open-source solution which would have little if any upfront costs but may require some customization. The school administrator must decide about which solution to go with.…arrow_forwardC7-73 Calculate breakeven and margin of safety after hotel renovation (Learning Objective 2) Cost-Volume-Profit Analysis 437 This case is a continuation of the Caesars Entertainment Corporation serial case that began in Chapter 1. Refer to the introductory story in chapter 1 (see page 43) for additional background. (The components of the Caesars serial case can be completed in any order.) Caesars Palace® Las Vegas made headlines when it undertook a $75 million renovation. In mid-September 2015, the hotel closed its then-named Roman Tower, which was last updated in 2001, and started a major renovation of the 567 rooms housed in that tower . On January 1, 2016, the newly renamed Julius Tower reopened, replacing the Roman Tower. In addition to renovating the existing rooms and suites in the former Roman Tower, 20 guest rooms were added to the Roman Tower. With the renovation completed, Caesars expects the Julius Tower room rate to average around $149 per night. This increase, a $25 or 20…arrow_forward
- Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.You are required to submit this assignment to LopesWrite. Please refer to the directions in the Student Success Center.Paul Duncan, financial manager of EduSoft Inc., is facing a dilemma. The firm was founded 5 years ago to provide educational software for the rapidly expanding primary and secondary school markets. Although EduSoft has done well, the firm's founder believes an industry shakeout is imminent. To survive, EduSoft must grab market share now, and this will require a large infusion of new capital.Because he expects earnings to continue rising sharply and looks for the stock price to follow suit, Mr. Duncan does not think it would be wise to issue new common stock at this time. On the other hand, interest rates are currently high by historical standards, and the firm's B rating means that interest payments on a new debt issue would be prohibitive.…arrow_forwardYou begin a new job at Cabrera Medical Supplies. The company is considering a new accounting system, with an initial investment of about half a million dollars for new software and hardware. You are excited for the opportunity to apply your managerial accounting skills regarding screening and preference methods to decide on the best system for the company. Your boss is a little old-school, and when you mention some of the things you learned in managerial accounting, he says. Discounted cash flow methods are not the only way to approach this. I have more of a gut reaction approach that blows most managers out of the water when they become absorbed by discounted cash flow methods (DCF). How would you react and what would you discuss with your boss?arrow_forwardYou begin a new job at Cabrera Medical Supplies. The company is considering a new accounting system, with an initial investment of about half a million dollars for new software and hardware. You are excited for the opportunity to apply your managerial accounting skills regarding screening and preference methods to decide on the best system for the company. Your boss is a little old-school, and when you mention some of the things you learned in managerial accounting, he says, “Discounted cash flow methods are not the only way to approach this. I have more of a gut reaction approach that blows most managers out of the water when they become absorbed by discounted cash flow methods (DCF).” How would you react and what would you discuss with your boss?arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeCentury 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage