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The financial statements of Seldin,Inc. ,provide the following information for the current year:

-Early in 2018,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 2018?
A)$95,600 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

[The following information applies to the questions displayed below.]
The financial statements of Seldin,Inc. ,provide the following information for the current year:
 
-Early in 2018,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 2018?
A)$95,600 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.

Quizplus · Accepted Answer

The purchase of marketable securities is an investing activity, so the sale proceeds of $95,600 ($90,000 cost + $5,600 gain) are reported as cash provided by investing activities. Dividends received are typically considered operating activities, hence the $6,600 is included in cash provided by operating activities.

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