Question

Determining Net Cash Flow from Investing Activities Davis Inc. reported the following information: 12/31/2019 12/31/2018 Equipment $160,000 $115,000 Accumulated depreciation (85,000) (59,000) Investment (long-term) 18,610 10,000 In addition, Davis sold equipment costing $12,500 with accumulated depreciation of $6,150 for $2,390 cash, producing a $3,960 loss. Davis reported net income for 2019 of $122,350. Required: Compute net cash flow from investing activities. Use a minus sign to indicate negative cash flows (outflows).

Answer 1

Answer:

-$63,270

Explanation:

The computation of the net cash flow from investing activities is presented below:

Cash flow from investing activities

Sale of an equipment $2,390

Purchase of an investment -$8,610     ($18,610 - $10,000)

Purchase of an equipment -$57,500

Net cash flow used by investing activities -$63,270

The purchase of an equipment is

= $160,000 - $11,5000 + $12,500

= $57,500