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A. equipment with a book value of $82,500 and an original cost of $164,000 was sold at a loss of $31,000.

b. paid $112,000 cash for a new truck.
c. sold land costing $315,000 for $420,000 cash, yielding a gain of $105,000.
d. stock investments were sold for $96,300 cash, yielding a gain of $15,500.
use the above information to determine cash flows from investing activities. note: amounts to be deducted should be indicated with a minus sign.

User Taraskin
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1 Answer

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Final answer:

The cash flows from investing activities include a cash inflow of $51,500 from sale of equipment, a cash outflow of $112,000 for purchase of truck, another inflow of $420,000 from sale of land, and an inflow of $96,300 from sale of stock investments, totaling $455,800.

Step-by-step explanation:

To determine the cash flows from investing activities, we need to consider the transactions provided that affect long-term assets. Here's the breakdown:

  • The equipment was sold at a loss, which is calculated as book value minus sale price. Since it was sold at a loss of $31,000 and its book value was $82,500, the cash inflow from the sale would be the book value minus the loss: $82,500 - $31,000 = $51,500.
  • Purchasing a new truck for $112,000 cash would be considered a cash outflow for investing activities.
  • Selling land for $420,000 cash that cost $315,000 results in a cash inflow.
  • The stock investments sold for $96,300 cash, yielding a gain involves a cash inflow as well.

Summing up these transactions for cash flows from investing activities results in:

  • Cash inflow from sale of equipment: $51,500
  • Cash outflow for purchase of truck: -$112,000
  • Cash inflow from sale of land: $420,000
  • Cash inflow from sale of stock investments: $96,300

Therefore, the total cash flows from investing activities would be $51,500 (sale of equipment) - $112,000 (purchase of truck) + $420,000 (sale of land) + $96,300 (sale of investments) = $455,800.

User Thurstan
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