Impact of transactions on cash flow statement
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Explain what effect the following transactions would have on cash and how they would be shown in a cash flow statement.
1. $2,000,000 piece of equipment is purchased with the proceeds of a new 12 month note
2. Mortgage bonds are retired with $790,000 cash and the proceeds of an issue of 150,000 shares of common stock.
3. $2,000,000 of inventory is purchased on account.
4. A dividend of $0.25 per share is declared o the 750,000 outstanding shares.
5. A piece of machinery is sold for $1,500,000 cash. When originally purchased it cost Anwat $5,000,000, and currently has $2,500,000 of accumulated depreciation.
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This discusses the Impact of transactions on cash flow statement
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1. $2,000,000 piece of equipment is purchased with the proceeds of a new 12 month note
It will have no impact as there is no cash flow
2. Mortgage bonds are retired with $790,000 cash and the proceeds of an issue of 150,000 shares of common stock.
There will be cash outflow on ...
Purchase this Solution
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