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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.

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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 16, Problem 2E
Textbook Problem
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State the effect (cash receipt or payment and amount) of each of the following transactions, considered individually, on cash flows:

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

To determine

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

Financial Accounting
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