Crocker Inc. had the following activity during 20X7: $$\begin{array} { | l | r | }
\hline \text { Proceeds from sale of bonds payable } & \$ 200,000 \
\hline \text { Loss from disposal of equipment (Net book value } \$ 60,000 ) & \$ 38,000 \
\hline \text { Dividends paid to shareholders } & \$ 25,000 \
\hline \text { Sale of shares } & \$ 125,000 \
\hline \text { Gain on the sale of short term investments } & \$ 75,000 \
\hline
\end{array}$$ What is the cash flow from investing activities?
A) $57,000
B) $75,000
C) $93,000
D) $22,000

Question

Crocker Inc. had the following activity during 20X7: $$\begin{array} { | l | r | } 
\hline \text { Proceeds from sale of bonds payable } & \$ 200,000 \
\hline \text { Loss from disposal of equipment (Net book value } \$ 60,000 ) & \$ 38,000 \
\hline \text { Dividends paid to shareholders } & \$ 25,000 \
\hline \text { Sale of shares } & \$ 125,000 \
\hline \text { Gain on the sale of short term investments } & \$ 75,000 \
\hline
\end{array}$$ What is the cash flow from investing activities?
A) $57,000
B) $75,000
C) $93,000
D) $22,000

Quizplus · Accepted Answer

The cash flow from investing activities includes the proceeds from the sale of equipment and short-term investments. The net cash from the sale of equipment is $60,000 (net book value) - $38,000 (loss) = $22,000. The gain on the sale of short-term investments is $75,000, but this gain is not the cash received; it's the profit over the cost. The actual cash flow from investing activities is the sum of these, which is $22,000 from the equipment sale (since the gain on investments doesn't represent the cash flow itself). Proceeds from the sale of bonds payable, dividends paid, and sale of shares are financing activities, not investing activities.

Crocker Inc What Is the Cash Flow from Investing Activities? A) $57,000

Crocker Inc What Is the Cash Flow from Investing Activities?
A) $57,000