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An analysis of changes in selected balance sheet accounts of Johnson Corporation shows the following for the current year:
Johnson's income statement for the current year includes a $14,000 loss on disposal of plant assets.All payments and proceeds relating to purchase or sale of plant assets were in cash.
-Based solely on the data provided above,Johnson's net cash flow from investing activities for the current year is:
A)$160,000 net cash used by investing activities.
B)$147,000 net cash used by investing activities.
C)$13,000 net cash provided by investing activities.
D)$91,000 net cash used by investing activities.

Question

[The following information applies to the questions displayed below.]
An analysis of changes in selected balance sheet accounts of Johnson Corporation shows the following for the current year:
  Johnson's income statement for the current year includes a $14,000 loss on disposal of plant assets.All payments and proceeds relating to purchase or sale of plant assets were in cash.
-Based solely on the data provided above,Johnson's net cash flow from investing activities for the current year is:
A)$160,000 net cash used by investing activities. 
B)$147,000 net cash used by investing activities. 
C)$13,000 net cash provided by investing activities. 
D)$91,000 net cash used by investing activities.

Quizplus · Accepted Answer

The decrease in the balance of the plant assets account indicates that Johnson Corporation sold plant assets during the current year. The loss on disposal of plant assets reported on the income statement indicates that the proceeds received from the sale of these plant assets were less than their carrying value. Since Johnson received cash proceeds from the sale of the plant assets, the cash received must be less than the carrying amount of the plant assets. Therefore, Johnson's net cash outflow from investing activities for the current year is $147,000 (the decrease in plant assets account plus the loss on disposal of plant assets).

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