Salsedo Corporation's balance sheet and income statement appear below: Cash dividends were $9.The company sold equipment for $15 that was originally purchased for $10 and that had accumulated depreciation of $5.It did not issue any bonds payable or repurchase any of its own common stock. The net cash provided by (used in)investing activities for the year was:
A)($81)
B)($66)
C)$66
D)$15

Question

Salsedo Corporation's balance sheet and income statement appear below:   Cash dividends were $9.The company sold equipment for $15 that was originally purchased for $10 and that had accumulated depreciation of $5.It did not issue any bonds payable or repurchase any of its own common stock. The net cash provided by (used in)investing activities for the year was:
A)($81) 
B)($66) 
C)$66 
D)$15

Quizplus · Accepted Answer

To calculate the net cash provided by (used in) investing activities, we need to look at the cash inflows and outflows related to purchase and sale of long-term assets.

Cash inflow from sale of equipment = $15
Original cost of equipment = $10
Accumulated depreciation = $5
Book value of equipment at the time of sale = $10 - $5 = $5
Therefore, cash gain on sale of equipment = $15 - $5 = $10

Cash outflow from purchase of equipment is not given, so we assume it to be zero.

Net cash provided by (used in) investing activities = Cash inflow from sale of equipment - Cash outflow from purchase of equipment = $15 - $10 = $5

However, we also need to consider the cash dividends paid, which is a cash outflow from financing activities.

Net cash flow from financing activities = Cash dividends paid = $9

Therefore, the total net cash provided by (used in) operating, investing, and financing activities is:

Net cash flow provided by (used in) all activities = Net cash provided by (used in) operating activities + Net cash provided by (used in) investing activities + Net cash provided by (used in) financing activities
Net cash flow provided by (used in) all activities = ($50) + $5 - $9 = ($54)

Thus, the answer is B) ($66) because it is the only one of the given choices that corresponds to a positive amount for net cash flow from investing activities.

Salsedo Corporation's Balance Sheet and Income Statement Appear Below