Question

16-3.1 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: Retired $310,000 of bonds, on which there was $3,100 of unamortized discount, for $322,000.

Sold 7,000 shares of $25 par common stock for $59 per share.

Sold equipment with a book value of $49,200 for $70,800.

Purchased land for $464,000 cash.

Purchased a building by paying $88,000 cash and issuing a $100,000 mortgage note payable.

Sold a new issue of $300,000 of bonds at 98.

Purchased 5,400 shares of $20 par common stock as treasury stock at $39 per share.

Paid dividends of $1.70 per share. T

here were 27,000 shares issued and 4,000 shares of treasury stock.

Effect Amount

a. Cash payment $

b. Cash receipt $

c. Cash receipt $

d. Cash payment $

e. Cash payment $

f. Cash receipt $

g. Cash payment $

h. Cash payment $

Answer 1

Requirement	Answer		Explanation/Working
a	Cash payments	$              322,000	Cash paid = amount paid on retirement
b	Cash receipts	$              413,000	Cash received = 7000 shares x $ 59
c	Cash receipts	$                70,800
d	Cash payments	$              464,000	Land purchased for cash
e	Cash payments	$                88,000	Cash paid = 88000
f	Cash receipts	$              294,000	Issue price = 300000 x 98/100
g	Cash payments	$              210,600	Cash is paid when Treasury Stock is purchased, 5400 shares x $39
h	Cash payments	$                39,100	Dividend paid on outstanding shares = (27000 - 4000) x $ 1.70