Question

​Connecticut, Inc. uses the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance​ sheet: ​Connecticut, Inc. Comparative Balance Sheet December​ 31, 2019 and 2018 2019 2018 Increase​ / ​(Decrease) Cash $ 22 comma 000 $ 18 comma 000 $ 4 comma 000 Accounts Receivable 31 comma 000 39 comma 000 ​(8 comma 000​) Merchandise Inventory 56 comma 000 25 comma 000 31 comma 000 Plant and Equipment 126 comma 000 93 comma 000 33 comma 000 Accumulated DepreciationminusPlant and Equipment ​(48 comma 000​) ​(40 comma 000​) ​(8 comma 000​) Total Assets $ 187 comma 000 $ 135 comma 000 $ 52 comma 000 Additional information provided by the company includes the​ following: 1. Equipment was purchased for $ 67 comma 000 with cash. 2. Equipment with a cost of $ 34 comma 000 and accumulated depreciation of $ 7 comma 100 was sold for $ 47 comma 000. What was the amount of net cash provided by​ (used for) investing​ activities? A. ​$(166 comma 000​) B. $ 166 comma 000 C. ​$(20 comma 000​) D. $ 20 comma 000 Click to select your answer.

Answer 1

Answer:

D. $ 20 comma 000

Explanation:

First is necessary to find the total cash by indirect method which is equal to the variance in the amount of Cash at the Balance Sheets.

Next is necessary remove from that balance the Equipment purchased by 67,000 and then the Equipment sold by 47,000, with this modifications we have the amount of net cash provided by​ investing​ activities.

Assets 2019 2018

Cash  $22,000   $18,000  

Accounts Receivable  $31,000   $39,000  

Inventory  $56,000   $25,000  

TOTAL CURRENT ASSETS   $109,000   $82,000  

Property and Equipment  $126,000   $93,000  

Depreciation Acc. -$48,000  -$40,000  

Building  $33,000    

TOTAL ASSETS   $220,000   $135,000  

Cash Flow Ind Method   $4,000  

Depreciation   $8,000  

Equipment Sold   $40,000  

Inventory   $31,000  

Accounts Receivable  -$8,000  

Equipment Purchased  -$67,000