Flow Company has provided the following information for the year ended December
ID: 2488899 • Letter: F
Question
Flow Company has provided the following information for the year ended December 31, 2014:
• Cash paid for interest, $15,500;
• Cash paid for dividends, $7,900;
• Cash dividends received, $5,900;
• Cash proceeds from bank loan, $20,000;
• Cash purchase of treasury stock, $6,500;
• Cash paid for equipment purchase, $22,500;
• Cash received from common stock, $32,500;
• Cash received from sale of land with a $27,500 book value, $21,400;
• Acquisition of land costing $46,500 in exchange for preferred stock issuance.
• Paid a $195,000 note payable by exchanging used machinery with a $72,500 book value and $195,000 fair value How much was Flow's net cash flow from investing activities?
A. A net inflow of $38,100
B. A net outflow of $47,600
C. A net outflow of $1,100.
D. A net inflow of $1,100.
Explanation / Answer
Answer
Note : It is assumed that Cash dividends received of $5,900 is an income as part of normal business operations hence it will be classified as cash flow from operating activity.
Figures in $
Particulars
Amount
Cash paid for equipment purchase
a
-22500
Cash received from sale of land
b
21400
Cash flow from Investing activity (a+b)
-1100
Answer : C. A net outflow of $1,100.
Figures in $
Particulars
Amount
Cash paid for equipment purchase
a
-22500
Cash received from sale of land
b
21400
Cash flow from Investing activity (a+b)
-1100
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