In preparing Marjorie Company's statement of cash flows for the most recent year, the following information is available: $\begin{array}{llr}
\text { Purchase of equipment } &\$260,000\
\text { Proceeds from the sale of equipment } &87,000\
\text { Purchase of land } &91,000
\end{array}$
Net cash flows from investing activities for the year were:
A) $438,000 of net cash provided.
B) $264,000 of net cash provided.
C) $438,000 of net cash used.
D) $351,000 of net cash used.
E) $264,000 of net cash used.

Question

In preparing Marjorie Company's statement of cash flows for the most recent year, the following information is available: $\begin{array}{llr}
  \text { Purchase of equipment } &\$260,000\
 \text { Proceeds from the sale of equipment } &87,000\
 \text { Purchase of land } &91,000
\end{array}$
 Net cash flows from investing activities for the year were:
A) $438,000 of net cash provided.
B) $264,000 of net cash provided.
C) $438,000 of net cash used.
D) $351,000 of net cash used.
E) $264,000 of net cash used.

Quizplus · Accepted Answer

Net cash flows from investing activities are calculated as cash inflows minus cash outflows. Here, cash inflows from the sale of equipment are $87,000, and cash outflows are $260,000 for equipment purchase and $91,000 for land purchase. Thus, net cash used is $260,000 + $91,000 - $87,000 = $264,000.

In Preparing Marjorie Company's Statement of Cash Flows for the Most