Early in 2010, Larsen Corporation purchased marketable securities at a cost of $90,000. In September, dividends of $6,600 were received; Larsen sold the securities in December at a gain of $5,600. How would these transactions be reported on Larsen's statement of cash flows for 2010?
A) $5,600 net cash provided by investing activities; $6,600 included in cash provided by operating activities.
B) $12,200 net cash provided by investing activities.
C) $95,600 cash provided by investing activities; $90,000 cash used in financing activities.
D) $84,400 net cash used in investing activities; $95,600 cash provided by investing activities.

Question

Quizplus · Accepted Answer

The purchase of marketable securities is a cash outflow and is reported as a cash used in investing activities. The receipt of dividends is a cash inflow and is reported as a cash provided by operating activities. The sale of marketable securities is a cash inflow and is reported as a cash provided by investing activities.

Early in 2010, Larsen Corporation Purchased Marketable Securities at a Cost