Question

For the year ended December 31, Year 1, Fields Company made cash payments of $61,600 for dividends, paid interest of $30,400, paid $39,600 cash to suppliers, and purchased equipment for $77,600 cash. What is the net cash used by investing activities for Year 1?A. $130,000 B. $209,200 C. $92,000 D. $77,600

Answer 1

D. $77,600

Step-by-step explanation:

The $77,600 made to purchase equipment would be reported as a cash outflow in the investing activities section. This is because asset purchased such as equipment is an investment while the cash used to purchase the asset is regarded as cash outflow.

Dividends are recorded in the financing section, while cash paid for interest and paid to suppliers would be recorded in the operating activities.