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In preparing its cash flow statement for the year ended December 31, 2018, Red Co. gathered the following data: Gain on sale of land $ 12,400 Proceeds from sale of land 24,000 Purchase of Blue, Inc., bonds (face value $210,000) 353,000 Amortization of bond discount 4,300 Cash dividends declared 95,000 Cash dividends paid 75,000 Proceeds from sales of Red Co. common stock 155,000 In its December 31, 2018, statement of cash flows, what amount should Red report as net cash outflows from investing activities?

Respuesta :

Answer:

The $329,000 is the amount which should Red report as net cash outflows from investing activities.

Explanation:

Investing Activities : The investing activities is that activities in which the purchase of fixed assets and intangible assets is to be recorded. Other expenses will  not be considered.

So,

The net cash outflow from investing activities = Purchase of Blue, Inc., bonds - Proceeds from sale of land

= $353,000 - $24,000

= $329,000

The Gain on sale of land is an operating activity.

The amortization of bond discount is also an operating activity.

Cash dividends declared is an financing activity.

Cash dividends paid is also an financing activity.

Proceeds from sales of Red Co. common stock is also an financing activity.

So, these costs is not considered.

Thus, the $329,000 is the amount which should Red report as net cash outflows from investing activities.

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