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The following data is for the Matt Company for 20X1:
Loss on sale of equipment $ 4,000
Purchase of Ithaca Corp. bonds (face value $400,000) 375,000
Proceeds from sale of machinery 200,000
Dividends paid 25,000
Proceeds from sale of treasury stock 100,000
The amount reported as net cash from investing activities is:
Multiple Choice
a. 87500
b. (175000)
c. 575000
d. (150000)

Respuesta :

Parrain

Answer: b. ($175,000)

Explanation:

Cash from investing activities refers to all transactions that have to do with the purchase or sale of a fixed asset (except losses or gains on sale of fixed assets) as well as securities of other companies.

In the above, the relevant transactions for investing activities are:

  • Purchase of Ithaca Corp. bonds
  • Proceeds from sale of machinery

Net cash from investing is therefore:

= -375,000 outflow + 200,000 inflow

= -$175,000

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