Question

Mary Andrews, Inc. had the following transactions:

Cash proceeds on sale of land $430,000
Cash proceeds on sale of equipment 140,000
Purchase of treasury stock with cash 53,000
Purchase of equipment with cash 48,000
Issuance of common stock for cash 70,000

On a statement of cash flows prepared under the indirect method, Net cash provided by investing activities is:

a. $543,000.
b. $495,000.
c. $590,000
d. $565,000.

Answer 1

On a statement of cash flows prepared under the indirect method, the net cash provided by investing activities is $495,000.

Step-by-step explanation:

Net cash provided by investing activities is calculated by subtracting the cash proceeds on the sale of land and equipment from the purchase of treasury stock and equipment. Issuance of common stock for cash is not included in the investing activities section. Using the given transactions:

• Cash proceeds on sale of land: $430,000
• Cash proceeds on sale of equipment: $140,000
• Purchase of treasury stock with cash: $53,000
• Purchase of equipment with cash: $48,000

Net cash provided by investing activities = (Cash proceeds on sale of land + Cash proceeds on sale of equipment) - (Purchase of treasury stock with cash + Purchase of equipment with cash)

= ($430,000 + $140,000) - ($53,000 + $48,000)

= $570,000 - $101,000

= $469,000

Therefore, the correct answer is b. $495,000.

Answer 2

$522,000

Step-by-step explanation:

Given;

Cash proceeds on sale of land = $430,000

Cash proceeds on sale of equipment = $140,000

Purchase of treasury stock with cash = $53,000

Purchase of equipment with cash = $48,000

Issuance of common stock for cash = $70,000

To find the net cash provided by investing, the investing activities in the information given are; Cash proceeds on sale of land, Cash proceeds on sale of equipment, and Purchase of equipment with cash.

Purchase of treasury stock with cash and Issuance of common stock for cash are financing activities.

Net cash provided by investing activities = $430,000 + $140,000 - $48,000

= $522,000

The correct answer is $522,000 which is not a part of the options given.