Question

Effect of Transactions on Cash Flows

Answer 1

Answer:

Explanation:

a. Cash paid for retirement of bonds would be deducted from cash flow's financing activities by 411,000

b. Cash received from issue of common stock would be added to the cash flow statement's financing activities as 440,000 [22*20,000]

c. Cash received from sale of equipment would be added to the cash flow statement's investing activities as 60,000

d. Cash paid for purchase of land would be deducted from cash flows from investing activities by 650,000

e. Cash paid for purchase of building would result in deduction from investing activities by 50,000

f. Cash received from issued of bonds would be added to the cash flows from financing activities as 490,000

[500,000/100 * 98]

g. Cash paid for purchase of treasury stock would decrease cash flows from financing activities by 332,500

[10,000*33.25]

h. Cash paid for dividents would be deducted from cash flow from financing activities by 1,320,000

[1,000,000 - 120,000]*1.50 = 1,320,000