Question

The following are data concerning cash received or paid from various transactions for Orange Peels Corporation: Sale of land $100,000 Sale of equipment 50,000 Issuance of common stock 70,000 Purchase of equipment 30,000 Payment of cash dividends 60,000 How much is net cash provided by investing activities in the statement of cash flows? A. $190,000 B. $120,000 C. $130,000 D $150,000

Answer 1

Answer:

A. $190,000

Explanation:

The breakdown analysis of Balance Sheet and Income Statement in terms of Cash in the form of Operating, Investing and Financing activities is known as Cash Flow Statement or the Statement of Cash Flows.

In Investing Activities Cash Flow we simply add Cash Proceeds from the sale of assets and subtract any proceeds from the purchases. The difference between the two is called Cash Flow from investing activities and it how much cash surplus or deficit we have from Investing Activities of Cash.

In the Statement of Cash Flows calculating Net Cash provided by investing activities is simple. Simply add Sale of Land, Sale of Equipment and Issuance of Common Stock. Subtract Purchase of Equipment from it and you will get the Net Cash Flow from Investing Activities.

Payment of Cash Dividend is the Financing Activities item so will not be taken into consideration in Investing Activities Cash flow as follows:

(+) Sale of Land $100,000

(+) Sale of Equipment $50,000

(+) Issuance of Common Stock 70,000

(-) Purchase of Equipment $30,000

NET CASH FLOW from INVESTING ACTIVITIES $190,000