# 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.

### Accounting

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

### 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 flowsState 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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