Question

Dover Co.'s comparative balance sheet indicated that the Equipment account increased by $40,000. Upon further investigation of the account changes, it is determined that Dover purchased equipment totaling $70,000 for the year. It also sold equipment with an original cost of $30,000 for $8,000 cash. Assuming these are the only transactions affecting the investing activities, Dover will report net cash flows provided by (used in) investing activities of:

Answer 1

Answer:

-$62,000

Explanation:

The computation of the net cash flow provided or used by investing activities is shown below:

Cash flow from investing activities

Purchase of an equipment -$70,000

Sale value of the equipment $8,000

Net cash flow used by investing activities -$62,000

The purchase represents the cash outflow therefore it is presented in a negative sign while the sale  represents the cash inflow therefore it is presented in a positive sign