Question

Below are cash transactions for Goldman Incorporated, which provides consulting services related to mining of precious metals

a. Cash used for purchase of office supplies, $1,650
b. Cash provided from consulting to customers, $43,100
c. Cash used for purchase of mining equipment, $68,000.
d. Cash provided from long-term borrowing, $55,000
e. Cash used for payment of employee salaries, $23,500.
f. Cash used for payment of office rent, $11,500
g. Cash provided from sale of equipment purchased in c. above, $22,000
h. Cash used to repay a portion of the long-term borrowing in d. above, $37,500
i. Cash used to pay office utilities, $3,800
j. Purchase of company vehicle, paying $9,500 cash and borrowing $14,500
Required:
Calculate cash flows from investing activities. (List cash outflows as negative amounts.)

Answer 1

Goldman Incorporated's cash flows from investing activities result in a net outflow of $55,500, which accounts for the purchase of mining equipment and a company vehicle, offset by the sale of equipment.

Step-by-step explanation:

To calculate the cash flows from investing activities for Goldman Incorporated, we need to consider the cash transactions that pertain to long-term assets. In investing activities, we include purchases and sales of long-term assets, such as equipment and vehicles.

The following transactions affect the cash flows from investing activities:

• (c) Cash used for purchase of mining equipment: -$68,000 (an outflow)
• (g) Cash provided from sale of equipment: $22,000 (an inflow)
• (j) Purchase of company vehicle: -$9,500 (an outflow, only the cash part)

To get the net cash flow from investing activities, we sum these amounts:

-68,000 (equipment purchase) + 22,000 (equipment sale) - 9,500 (vehicle purchase) = -$55,500

Therefore, the net cash flow from investing activities is -$55,500.

Answer 2

Net cash used in investing activities = ($55,500)

Step-by-step explanation:

Cash flows from Investing activities

Transaction Amount

Cash used for purchase of mining equipment -$68,000

Cash provided from sale of equipment +$22,000

purchased in c. above

Purchase of company vehicle. -$9,500

Net cash used in investing activities -$55,500