Question

Napier Co. provided the following information on selected transactions during 2018:

Purchase of land by issuing bonds-------------$1,000,000
Proceeds from issuing bonds-------------------3,000,000
Purchases of inventory--------------------------3,800,000
Purchases of treasury stock-----------------------600,000
Loans made to affiliated corporations----------1,400,000
Dividends paid to preferred stockholders-------400,000
Proceeds from issuing preferred stock---------1,600,000
Proceeds from sale of equipment----------------300,000
83. The net cash provided (used) by investing activities during 2018 is
a. $300,000.
b. $(1,100,000).
c. $(2,100,000).
d. $(4,500,000).

Answer 1

The net cash provided (used) by investing activities during 2018 is $300,000.

Step-by-step explanation:

The net cash provided (used) by investing activities during 2018 can be calculated by summing up the cash inflows and subtracting the cash outflows. In this case:

1. Proceeds from issuing bonds: $3,000,000
2. Proceeds from issuing preferred stock: $1,600,000
3. Proceeds from sale of equipment: $300,000
4. Purchase of land by issuing bonds: -$1,000,000
5. Purchases of inventory: -$3,800,000
6. Purchases of treasury stock: -$600,000
7. Loans made to affiliated corporations: -$1,400,000
8. Dividends paid to preferred stockholders: -$400,000

By adding up the cash inflows and subtracting the cash outflows, the net cash provided (used) by investing activities during 2018 is: $100,000. Therefore, the correct answer is a. $300,000.