Investing Activities

Concept: Investing Activities Summary

9m

Example: Investing Activities

13m

Problem: Which of the following is a cash flow from investing activities?

2m

Problem: The cash received from the sale of factory equipment no longer in use would be reported in the cash flow statement as an:

1m

Problem: Spooky Company is preparing its Statement of Cash Flows and gathered the following information: 

1. Since the previous year: the cash account increased by $35,000, land increased by $40,000, Equipment decreased by $15,000, Accumulated Depreciation – Equipment increased by $6,000, and Bonds Payable increased by $100,000 

2. Depreciation expense for Equipment totaled $16,000. 

3. Equipment with a purchase price of $15,000 was sold for a $2,000 gain. 

4. Spooky loaned $24,000 to Witch Company signing a long-term note receivable. 

5. Spooky declared and paid dividends of $32,000. Net income was $420,000. 

What is Spooky Company’s net cash flow from investing activities?

13m

Investing Activities Additional Practice Problems

Laurie Co. sold a machine for cash. The machine originally cost $20,000, and accumulated depreciation of $15,000 had been recorded up to the time of disposal. A gain on the disposal of $2,000 was reported. Therefore, cash inflow from the sale of the machine was:

a. $7,000

b. $3,000

c. $4,000

d. $5,000

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Which of the following transactions would be considered an investing activity on a Statement of Cash Flows?

A) Purchased equipment for cash

B) Sold stock for cash to stockholders

C) Borrowed $200,000 on a long- term note

D) Paid $45,000 for inventory for resale

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A company buys and sells passive investments. Which of the following activities is included as an investing activity on the statement of cash flows?

A) The sale of the investment.

B) The loss on the sale of the investment.

C) Dividends received from associated companies.

D) All of the above.

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Consider the following transactions:

What was the net cash flow from investing activities?

A. $27,000 inflow

B. $330,000 outflow

C. $15,000 outflow

D. $585,000 outflow

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When property, plant, or equipment are sold at price that is in excess of book value, the sales should be reported as an inflow of cash from an investing activity equal to the

A. book value of the asset.

B. cash selling price of the asset.

C. cash selling price of the asset minus any gain on the asset.

D. cash selling price of the asset minus the book value.

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Equipment with an original cost of $140,000 and accumulated depreciation of $130,000 was sold for $12,000 cash . What amount of this transaction will be reported as an investing activity on the statement of cash flows?

A. $10,000

B. $12,000

C. $2,000

D. $128,000

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Consider the following:

What was the net cash inflow (outflow) from investing activities?

A. $138,000

B. $12,000

C. $183,000

D. $103,000

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Which of the following is reported as an investing activity on the statement of cash flows?

A. sale of common stock

B. purchase of office equipment

C. collection of accounts receivable

D. purchase of treasury stock

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The following selected account balances were taken from Buckeye Company's general ledger at January 1, 2005 and December 31, 2005:

Calculate the net cash flow from  investing activities for 2005.

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During January, ABC Company reported the following payments of cash:

● $20,000 cash paid to purchase inventory
● $40,000 cash paid to owners as a dividend
● $50,000 cash paid to purchase land
● $10,000 cash paid to employees for salaries

In its statement of cash flows for January, ABC Company would show cash outflows from  investing activities of:

A. $30,000

B. $40,000

C. $50,000

D. $60,000

E. $70,000

F. $90,000

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XYZ Company purchased some equipment with cash on 10/15/15. What type of activity would this be classified as on the statement of cash flows?

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Atkins Corporation has provided the following information for the year ended December 31, 2010:

These facts imply that:

a. A $135,000 cash inflow is reported from the sale of short-term investments.

b. A $200,000 cash outflow is reported for short-term investment purchases.

c. A $150,000 cash outflow is reported for the sale of short-term investments.

d. A $335,000 cash outflow is reported for short-term investment purchases.

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During 2014, Tada Company sold a building with a book value of $145,000 for proceeds of $132,000. The company also sold long-term investments for proceeds of $45,000. The company purchased land and a new building for $320,000 by signing a long-term note payable. No other transactions impacted long-term asset accounts during 2014. Compute net cash flows from investing activities.

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Which of the following would be classified as an investing activity?

a) Purchasing an investment in bonds

b) Payment of a dividend

c) Issuing Common Stock

d) Payment of interest

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P Company sold equipment that cost $45,600 for $12,450. Depreciation on the equipment from purchase to date of sale amounted to $35,000. What amount is reported in the Cash Flows from Investing Activities section of the Statement of Cash Flows?

a) $12,450

b) $0

c) $1,850

d) $10,600

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A Company received $50,000 in cash when it sold a building and paid $90,000 in cash when it purchased some new machinery. As a result, the statement of cash flows would report

a) $40,000 as the net cash used in financing activities.

b) $40,000 as the net cash provided by investing activities.

c) $40,000 as the net cash used in investing activities.

d) $40,000 as the net cash provided by financing activities.

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Investing activities include

a) Purchases of merchandise for cash.

b) Purchases of plant and equipment for cash.

c) Purchases of prepaid expense items such as supplies and insurance for cash.

d) Increase in accounts receivable.

Watch Solution