During 2014the year,the Abbot Company had the following changes in account balances: 1)The accumulated depreciation accountAccumulated Depreciation account had a beginning balance of $25,000 and an ending balance of $35,000.The increase was due to depreciation expense.
2)The long-term notes payableNotes Payable account had a beginning balance of $40,000 and an ending balance of $15,000.The decrease was due to repayment of debt.
3)The accounts receivableAccounts Receivable account had a beginning balance of $60,000 and an ending balance of $50,000.
4)The equipmentEquipment account had a beginning balance of $25,000 and an ending balance of $92,500.The increase was due to the purchase of equipment for cash.
5)The long term investments account (marketable securities)had a beginning balance of $18,000 and an ending balance of $12,500.The decrease was due to the sale of investments at cost.
6)The amount of cash dividends declared and paid during the year was $22,000.
7)The interest payable account had a beginning balance of $2,250 and an ending balance of $1,250.
What is the net cash flow from investing activities?
A) $62,000 outflow
B) $62,000 inflow
C) $72,000 inflow
D) $72,000 outflow

Question

Quizplus · Accepted Answer

Cash flows reported as investing activities include: (1)cash receipts (inflows)from selling property,plant,equipment,or marketable securities as well as collections from credit instruments such as notes or mortgages receivable and (2)cash payments (outflows)for purchasing property,plant,equipment,or marketable securities as well as for making loans to borrowers.In this situation:
Net cash flow from investing activities = Cash inflow to sell investments - Cash outflow to purchase equipment
Net cash flow from investing activities = ($18,000 - $12,500)- ($92,500 - $25,000)= $5,500 - $67,500 = ($62,000)

During 2014the Year,the Abbot Company Had the Following Changes in Account