Question

Sale of short term investments $6000

Cash Collections from Customers $16,000
Purchase of used equipment $5000
Depreciation Expense $2000

Compute cash flows from investing activities using the above company information. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1

To compute cash flows from investing activities, we need to consider the purchases and sales of investment assets. In this case, the sale of short-term investments and the purchase of used equipment are relevant. The net cash flows from investing activities would be $1000.

Step-by-step explanation:

To compute cash flows from investing activities, we need to consider the purchases and sales of investment assets. In this case, the sale of short-term investments for $6000 and the purchase of used equipment for $5000 are relevant.

Cash inflows from the sale of short-term investments are considered a positive cash flow, so we will add $6000 to the cash flows from investing activities.

On the other hand, the purchase of used equipment is considered a cash outflow, so we will subtract $5000 from the cash flows from investing activities.

Therefore, the net cash flows from investing activities would be $6000 - $5000 = $1000.