Question

State the effect (cash receipt or 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 $40 par common stock as treasury stock at $50 per share. Paid dividends of $1.50 per share. There were 1,000,000 shares issued and 120,000 shares of treasury stock.]
Amount
a. $
b. $
c. $
d. $
e. $
f. $
g. $
h. $

Answer 1

Answer:

A. Effect=CASH PAYMENT

Amount=$411,000

B. Effect=CASH RECEIPT

Amount=$440,000

C. Effect= CASH RECEIPT

Amount=$60,000

D. Effect= CASH PAYMENT

Amount=$650,000

E. Effect= CASH PAYMENT

Amount=$50,000

F.Effect=CASH RECEIPT

Amount=$490,000

G. Effect= CASH PAYMENT

Amount=$400,000

H. Effect=CASH PAYMENT

Amount=$1,320,000

Explanation:

Calculation to State the effect of cash receipt or payment and the amount

A. Based on the information given the effect will be CASH PAYMENT of the amount of $411,000

Effect= CASH PAYMENT

Amount=$411,000

B. Based on the information given the effect will be CASH RECEIPT of the amount of $440,000(20,000*$22))

Effect= CASH RECEIPT

Amount= $440,000

(20,000*$22)

C. Based on the information given the effect will be CASH RECEIPT of the amount of $60,000

Effect=CASH RECEIPT

Amount=$60,000

D. Based on the information given the effect will be CASH PAYMENT of the amount of $650,000

Effect=CASH PAYMENT

Amount= $650,000

E. Based on the information given the effect will be CASH PAYMENT of the amount of $50,000

Effect=CASH PAYMENT

Amount=$50,000

F. Based on the information given the effect will be CASH RECEIPT of the amount of $490,000 (98%*$500,000)

Effect=CASH RECEIPT

Amount=$490,000

(98%*$500,000)

G. Based on the information given the effect will be CASH PAYMENT of the amount of $400,000 (10,000*$40)

Effect=CASH PAYMENT

Amount=$400,000

(10,000*$40)

H. Based on the information given the effect will be CASH PAYMENT of the amount of $1,320,000 (1,000,0000*$1.50)-(120,000*$1.50)]

Effect= CASH PAYMENT

Amount=$1,320,000

[(1,000,0000*$1.50)-(120,000*$1.50)]

=$1,500,000-$180,000

=$1,320,000