The Floor Store had interest expense of $38,400, depreciation of $28,100, and taxes of $19,600 for the year. At the start of the year, the firm had total assets of $879,400 and current assets of $289,600. By year's end total assets had increased to $911,900 while current assets decreased to $279,300. What is the amount of the cash flow from investment activity for the year?
A) −$51,150
B) $21,850
C) $29,300
D) −$70,900
E) −$89,400

Question

Quizplus · Accepted Answer

To calculate cash flow from investment activities, we need to determine the change in long-term assets (non-current assets) of the company.

Beginning Total Assets = $879,400 
Ending Total Assets = $911,900

Change in Total Assets = Ending Total Assets - Beginning Total Assets 
= $911,900 - $879,400 
= $32,500

Beginning Current Assets = $289,600 
Ending Current Assets = $279,300

Change in Current Assets = Ending Current Assets - Beginning Current Assets 
= $279,300 - $289,600 
= -$10,300

Change in Non-Current Assets = Change in Total Assets - Change in Current Assets 
= $32,500 - (-$10,300) 
= $42,800

Cash Flow from Investment Activities = -$28,100 (depreciation) - $42,800 (change in non-current assets) 
= -$70,900

Therefore, the answer is D, -$70,900.

The Floor Store Had Interest Expense of $38,400, Depreciation of $28,100