Henderson Plastics is a manufacturer that takes in post- consumer plastics (i. e., empty milk jugs) and recycles those plastics into a variety of building materials. Because the company has a strong focus on sustainability, the company managers try, whenever possible, to use recycled materials and to invest in sustainable projects.
Last year, the company engaged in several sustainable practices that had an impact on its cash flows. For each of the transactions listed below, indicate whether the transaction would have affected the operating, investing, or financing cash flows of the company. Additionally, indicate whether each transaction would have increased (+) or decreased (-) cash.
Transactions:
1. When the plastic wood is cut into the lengths needed to make trellises, the end pieces cut off are scrap. Henderson sold this cutting scrap to another recycler.
2. A wind- turbine was built to power part of Henderson’s operations.
3. A Honda Civic Hybrid automobile was purchased for use by the sales manager of Henderson while on company business.
4. Henderson became a minority partner in a biofuel project by investing $ 2 million in cash in the project.
5. Throughout the year, Henderson participated in several trade shows that featured green products for use by the housing construction industry. For each trade show, Henderson incurred cash expenses for transportation, registration, meals and lodging, and booth setup.
6. Henderson paid off long- term bonds during the year using excess funds.
7. Henderson installed a “living roof” on its manufacturing facility. This roof is made mostly from sedum, a drought- resistant perennial grass- like groundcover. The plants help to reduce storm- water runoff and double the expected life of the roof over a conventional roof. The plants also reduce heating and cooling needs by providing an extra layer of insulation. Additionally, the plants absorb carbon dioxide to help to ­reduce greenhouse gases. The living roof was paid for with cash.
8. A fleet of plug- in electric cars was purchased for the sales staff.
9. New production equipment that is 40% more energy efficient than the old equipment was purchased for cash.
10. Engineers at Henderson performed research into a new process that injects tiny air bubbles into the plastic to reduce the usage of raw materials (plastics) and to reduce the weight of the finished products.