Question & Answer: Chandler Company's net income last year was $98,000 and cash dividends declared and paid to the company stockholders was $1…..

Chandler Company’s net income last year was $98,000 and cash dividends declared and paid to the company stockholders was $13,000. Changes in selected balance sheet accounts for the year appear below:

Increases
(Decreases)
Debit balances:
Cash $ (3,000)
Accounts receivable 1,000
Inventory (1,000)
Prepaid expenses 13,000
Long-term investments 70,000
Plant and equipment 45,000
Credit balances:
Accumulated depreciation 61,000
Accounts payable (11,000)
Accrued liabilities (9,000)
Taxes payable 9,000
Bonds payable (50,000)
Common stock 40,000
Retained earnings 85,000

The net cash flows from investing activities to be reported in a statement of cash flows is:

a.$75,000.

b.$(115,000).

c.$(75,000).

d.$115,000.

Expert Answer

 

b.$(115,000).
Statement of Cash Flow
Particulars Amount Total Amount
Cash flow from Investing activities
Increase in Long term investment       (70,000.00)
Purchase of PPE       (45,000.00)
Cash flow from Investing activities      (115,000.00)
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