Suzanne Inc.'s policy is to report all cash flows arising from interest and dividends in the operating activities section.The activities for the year ended December 31,2018 included the following: • Interest revenue for the period was $12,000.The interest receivable account decreased $3,000.
• Sold an available-for-sale investment for $10,000.The book value was $5,000.
How much would be presented as cash flow from operating activities?
A)Proceeds from disposal in the amount of 10,000 + Interest received in the amount of 12,000.
B)Proceeds from disposal in the amount of 10,000 + Interest received in the amount of 15,000.
C)Gain on sale in the amount 5,000 + Interest received in the amount of 12,000.
D)Gain on sale in the amount 5,000 + Interest received in the amount of 15,000.

Question

Quizplus · Accepted Answer

The correct cash flow from operating activities includes the gain on sale of the investment ($5,000) and the interest received. The interest received is calculated by adding the interest revenue ($12,000) to the decrease in interest receivable ($3,000), totaling $15,000. Proceeds from the disposal of the investment are not considered an operating activity but an investing activity.