Question

Selected information from Jimmy Corporation’s accounting records and financial statements for 2006 is as follows (amounts in millions):

Cash paid to acquire equipment.              $18

Treasury stock purchased for cash.            25

Proceeds from sale of land and buildings.  45

Gain from the sale of land and buildings.   26

Investment revenue received.                     33

Cash paid to acquire office equipment.      40

On its statement of cash flows, Jimmy should report net cash outflows from investing activities of:

1. $13 Million
2. $23 Million
3. $38 Million
4. $39 Million

Answer 1

SOLUTION

Jimmy should report net cash outflows from investing activities of $13 millions.

Calculation of net cash outflows from investing activities-

Particulars	Amount ($ in millions)
Cash flows from investing activities-
Cash paid to acquire equipment	(18)
Proceeds from sale of land and buildings	45
Gain from the sale of land and buildings	26
Cash paid to acquire office equipment	(40)
Net cash outflows from investing activities	13

*Treasury stock purchased for cash - It will cause decrease in cash and it will be part of cash flow from financing activities.

** Investment revenue received - It will be part of cash flow from operating activities.