Question

Two years ago, Bethel, Inc. bought $47,500 in bonds from another company. This month, it sold half of those bonds for $22,040 and purchased the common stock of another company for $1,700. On the statement of cash flows for this accounting period, Bethel would report a net cash:
Multiple Choice
a. inflow of $22,040 from investing activities.
b. outflow of $20,340 from investing activities.
c. outflow of $22,040 from investing activities.
d. inflow of $20,340 from investing activities.

Answer 1

Answer:

The correct option is D

Explanation:

The net cash will be computed as:

Net Cash = Bonds sold amount - Purchases amount of common stock

where the values are:

Bonds sold amount is $22,040

Purchases amount of common stock is $1,700

Putting the values:

= $22,040 - $1,700

= $20,340

The net cash amounts to $20,340 which is an inflow from the investing activities.