Question

The Plastic Lumber Company, Inc., (PLC) is a manufacturer that takes in post- consumer plastics (i. e., empty milk jugs) and recycles those plastics into a “plastic lumber” that can be used to build furniture, decking, and a variety of other items. Because Plastic Lumber 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 have 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. Engineers at PLC 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.
2. A Honda Civic Hybrid automobile was purchased for use by the CEO of PLC.
3. PLC became a minority partner in a solar- panel electricity generation project by ­investing $ 1 million in cash in the project.
4. Throughout the year, PLC participated in several trade shows that featured green products for use by parks and recreation facilities. For each trade show, PLC incurred cash expenses for transportation, registration, meals and lodging, and booth setup.
5. A fleet of plug- in electric cars was purchased for sales staff.
6. PLC installed a “living roof” on its manufacturing facility. This roof is made mostly from sedum, runoff, and doubles 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 green- house gases. The living roof was paid for with cash.
7. When the plastic wood is cut into lengths needed to build picnic tables, the end pieces cut off are scrap. PLC sold this cutting scrap to another recycler.
8. A wind- turbine was built to power part of PLC’s operations.
9. PLC issues long- term bonds during the year to help to finance growth.
10. New production equipment that is 40% more energy efficient than the old equipment was purchased for cash.



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  • CreatedAugust 27, 2014
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