Kania Corporation's most recent balance sheet appears below:
The net income for the year was $171. Cash dividends were $44. The net cash provided by (used by) investing activities for the year was:
A) ($91)
B) ($139)
C) $91
D) $139

Question

Kania Corporation's most recent balance sheet appears below: 
The net income for the year was $171. Cash dividends were $44. The net cash provided by (used by) investing activities for the year was:
A) ($91) 
B) ($139) 
C) $91 
D) $139

Quizplus · Accepted Answer

To calculate the net cash provided by (used by) investing activities, we need to look at the change in long-term assets (property, plant, and equipment) and investments (short-term and long-term). From the balance sheet, we can see that the total of property, plant, and equipment and investments decreased from $776 to $710, which is a decrease of $66. However, we also need to subtract the proceeds from the sale of investments, which is $25. Therefore, the net cash used by investing activities is $66 - $25 = $41. Adding this to the net income of $171 and subtracting the dividends paid of $44, we get a net increase in cash of $86. However, we are looking for the net cash provided by (used by) investing activities, which is the opposite of the calculation we just did, so the answer is -$86 or ($86). This is closest to choice B, which is ($139).

Kania Corporation's Most Recent Balance Sheet Appears Below