Question

Superfine Company collected the following data in preparing its cash flow statement for the year ended December 31, 2017: Amortization of bond discount $ 1,000 Dividends declared 22,500 Dividends paid 19,000 Gain on sale of equipment 3,000 Proceeds from the sale of equipment 5,000 Proceeds from the sale of treasury stock (carrying amount $32,500) 37,500 Purchase of BAS Inc. bonds (par value $100,000) 90,000 Required: Determine the following amounts that should be reported in Superfine’s 2017 statement of cash flows. What amount should Superfine report as net cash used in investing activities? What amount should Superfine report as net cash provided by financing activities?

Answer 1

Answer: a. ($85,000) ; b. $18500

Explanation:

a. What amount should Superfine report as net cash used in investing activities?

Sale of equipment = $5,000

Less: Purchase of bond = ($90,000)

Net cash used in investing activities = ($85,000)

b. What amount should Superfine report as net cash provided by financing activities?

Proceeds from treasury sold = $37500

Less: Dividend paid = ($19,000)

Net cash provided by financing activities will be: = $18500