Question

In Jackson Jones Company, land decreased $270,000 because of a cash sale for $270,000, the equipment account increased $90,000 as a result of a cash purchase, and bonds payable increased $300,000 from issuance for cash at face value. The net cash provided by investing activities is ________.a. $270,000. b. $480,000. c. $210,000.d. $180,000.

Answer 1

The answer is D. $180,000

Step-by-step explanation:

Investing activities is about spending on long term asset or long term investments.

Under investing activities in cash flow, what constitutes inflow is the sales of these long term assets like plant and machinery and what constitutes outflow is the purchase of these assets.

In this question, the inflow is the sale of equipment which us $270,000 and outflow is the purchase of equipment for $90,000.

So net cash flow from investing activities is:

$270,000 - $90,000

=$180,000