Question

9) Napier Co. provided the following information on selected transactions during 2018: Purchase of land by issuing bonds $1,000,000 Proceeds from issuing bonds 3,000,000 Purchases of inventory 3,800,000 Purchases of treasury stock 600,000 Loans made to affiliated corporations 1,400,000 Dividends paid to preferred stockholders 400,000 Proceeds from issuing preferred stock 1,600,000 Proceeds from sale of equipment 300,000 The net cash provided (used) by investing activities during 2018 is

Answer 1

The net cash provided (used) by investing activities during 2018 is -$1,900,000.

Step-by-step explanation:

The net cash provided (used) by investing activities during 2018 can be calculated by summing up the cash inflows and subtracting the cash outflows. In this case, the cash inflows include the proceeds from issuing bonds ($3,000,000), the proceeds from issuing preferred stock ($1,600,000), and the proceeds from the sale of equipment ($300,000), which total $4,900,000. The cash outflows include the purchase of land by issuing bonds ($1,000,000), the purchases of inventory ($3,800,000), the purchases of treasury stock ($600,000), and the loans made to affiliated corporations ($1,400,000), which total $6,800,000. Therefore, the net cash provided (used) by investing activities during 2018 is $(6,800,000 - 4,900,000) = -$1,900,000.

Answer 2

($1,100,000)

Step-by-step explanation:

Given that

Loans made to affiliated corporations = $1,400,000

Proceeds from sale of Equipment = $300,000

The computation of net cash provided (used) by investing activities is here below:-

Net cash provided(used) by investing activities = (Loans made to affiliated corporations) - Proceeds from sale of Equipment

= ($1,400,000) - $300,000

= ($1,100,000)

So, for computing the cash provided(used) by investing activities we simply applied the above formula.