Question

Red, Inc. had the following activities during year 8: - Acquired a bond investment for $40,000, which Red intends to hold to maturity. - Sold equipment to another corporation for $24,000 when the carrying value was $22,000. - Acquired a stock investment for $8,500, which Red intends to hold for trading. - Made a loan to an employee for $12,500. - Collected interest on a bond investment of $2,500. In Red's year 8 statement of cash flows, net cash used in investing activities should be

$28,500 (smallest)
$30,000
$15,000
$50,000

Answer 1

In Red's year 8 statement of cash flows, net cash used in investing activities would be $48,500.

Step-by-step explanation:

Net cash used in investing activities is the sum of cash used in acquiring long-term assets. In this case, the bond investment and the stock investment are both long-term assets and are considered investing activities. To calculate the net cash used in investing activities, we add up the cash used for the investing activities and deduct the cash received from the investing activities:

$40,000 (bond investment) + $8,500 (stock investment) - $0 (cash received from investing activities) = $48,500

Therefore, the net cash used in investing activities in Red, Inc.'s year 8 statement of cash flows is $48,500.