Companies are affected by a number of events and transactions, some of which have an effect on their cash and cash equivalents, and some which do not. Following are some examples of such events and transactions:
1. Annual payment of $100 on a finance lease obligation, $2 of which is interest
2. Acquisition of a 4100, 3%, 90-day government treasury bill
3. Payment of $25 to a pension fund trustee
4. Cash received on the maturity of the treasury bill in item 2 above
5. Annual payment of $100 on an operating lease for sales office space
6. Receipt of $10 on the sublease of excess sales office space
7. Acquisition of the company’s treasury shares at a cost of $75
8. Conversion of convertible debt into common shares
9. Payment of $30 of a portion of long-term debt reported in current liabilities along with $3 of interest
10. Costs incurred to repair a customer’s product under warranty—inventory supplies used $1; labor paid $4
? Instructions
For each item listed above
(a) Identify the effect on the company’s cash and cash equivalents; and
(b) Indicate how the transaction or event will be reported on the company’s statement of cash flows, if at all, and if any special disclosures are required.