Question

The net cash provided (used) by investing activities is:_______

a. $(352,000).
b. $48,000.
c. $240,000.
d. $(288,000).
Harlan Mining Co. has recently decided to go public and has hired you as an independent CPA. One statement that the enterprise is anxious to have prepared is a statement of cash flows. Financial statements of Harlan Mining Co. for 2019 and 2018 are provided below.
The following additional data were provided:________.
1. Dividends for the year 2019 were $192,000.
2. During the year, equipment was sold for $240,000.
3. This equipment cost $352,000 originally and had a book value of $288,000 at the time of sale.
4. The loss on sale was incorrectly charged to cost of sales.
5. All depreciation expense is in the selling expense category.

Answer 1

Missing information:

BALANCE SHEETS 12/31/19 12/31/18

Cash $408000 $192000

Accounts receivable $360000 $216000

Inventory $384000 $480000

Property, P & E $608000 $960000

Less accum. depre. ($320000) ($304000)

$1440000 $1544000

Accounts payable $176000 $96000

Income taxes payable $352000 $392000

Bonds payable $360000 $600000

Common stock $216000 $216000

Retained earnings $336000 $240000

$1440000 $1544000

INCOME STATEMENT

For the Year Ended December 31, 2019

Sales revenue $8400000

Cost of sales $7152000

Gross profit $1248000

Selling expenses $600000

Administrative expenses $192000

Income from operations $456000

Interest expense $72000

Income before taxes $384000

Income taxes $96000

Net income $288000

Answer:

C) $240,000.

Step-by-step explanation:

Net cash flows from investing activities = cash inflows from investing activities - cash outflows from investing activities = $240,000 (sale of equipment) - $0 (no investment made) = $240,000

Net cash flows from investing activities includes all the outflows used to make investments during the year or the inflows generated from existing investments. This includes investments in other companies, investments in real property and investment in machinery and equipment.