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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 $400,000 of bonds, on which there was $3,000 of unamortized discount, for $411,000. b. Sold 20,000 shares of $5 par common stock for $22 per share. c. Sold equipment with a book value of $55,800 for $60,000. d. Purchased land for $650,000 cash. e. Purchased a building by paying $50,000 cash and issuing a $450,000 mortgage note payable. f. Sold a new issue of $500,000 of bonds at 98. g. Purchased 10,000 shares of $40 par common stock as treasury stock at $50 per share. h. Paid dividends of $1.50 per share. There were 1,000,000 shares issued and 120,000 shares of treasury stock.

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 16, Problem 16.2EX
Textbook Problem

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 $400,000 of bonds, on which there was $3,000 of unamortized discount, for $411,000.

b. Sold 20,000 shares of $5 par common stock for $22 per share.

c. Sold equipment with a book value of $55,800 for $60,000.

d. Purchased land for $650,000 cash.

e. Purchased a building by paying $50,000 cash and issuing a $450,000 mortgage note payable.

f. Sold a new issue of $500,000 of bonds at 98.

g. Purchased 10,000 shares of $40 par common stock as treasury stock at $50 per share.

h. Paid dividends of $1.50 per share. There were 1,000,000 shares issued and 120,000 shares of treasury stock.

Expert Solution
To determine

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

To Show: The effect of the given transactions whether is a cash receipt or cash payment.

Explanation of Solution

  • Retired bonds will be reported under the financing activity section of the statement of cash flows as a cash payment of $411,000.
  • Sold 20,000 shares at 22 per share will be reported under the financing activity section of the statement of cash flows as a cash receipt of $440,000.
  • Sold equipment of $60,000 will be reported under the investing activity section of the statement of cash flows as a cash receipt of $60,000.
  • Purchased land by cash of $650,000 will be reported under the investing activity section of the statement of cash flows as a cash payment of $650,000.
  • Purchased building by paying cash of $50,000 will be reported under the investing activity section of the statement of cash flows as a cash payment of $50,000...

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Chapter 16 Solutions

Accounting
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