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

Question

Effect of Transactions on Cash Flows State the effect (cash receipt or cash payment and amount) of each of the following transactions, considered individually, on cash flows:

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

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

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

Purchased land for $650,000 cash.

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

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

Purchased 10,000 shares of $10 par common stock as treasury stock at $33.25 per share.

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

Explanation / Answer

effect amount working a.retirement of bonds - cash payment $411,000 b.sale of shares - cash receipt $440,000 $22*20,000=>$440,000 c.sale of equipment - cash receipt $60,000 d.purchase of land- cash payment $650,000 e.purchase of building- cash payment $50,000 note payable does not amount to cash payment f.issue of bonds -cash receipt $490,000 amount = 500,000*98%=>$490,000 g.purchase of treasury stock - cash payment $332,500 10,000 shares *33.25=>332,500 h.dividends - cash payment $1,320,000 (1,000,000-120,000)*1.50=>$1,320,000

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