Question

In preparing a company's statement of cash flows for the most recent year, the following information is available: Loss on the sale of equipment $ 14,100 Purchase of equipment 146,000 Proceeds from the sale of equipment 127,000 Repayment of outstanding bonds 87,500 Purchase of treasury stock 62,500 Issuance of common stock 96,500 Purchase of land 116,000 Increase in accounts receivable during the year 43,500 Decrease in accounts payable during the year 75,500 Payment of cash dividends 35,500 Net cash flows from investing activities for the year were: Multiple Choice $135,000 of net cash provided. $120,900 of net cash used. $254,000 of net cash used. $222,500 of net cash provided. $135,000 of net cash used.

Answer 1

Answer:

$135,000 of net cash used.

Explanation:

Cash flow from investing activities include the purchase and sale of long-term assets. This does not include the profits or losses that were generated or incurred on the sale. So based on the information in the question, Cash flow from investing activities is computed below-

Cash Flow from Investing Activities = Proceeds from Sale of Equipment -Purchase of Equipment-Purchase of Land=127000-146000-116000=-135000

$135,000 of net cash used.