Question

​Connecticut, Inc. uses the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance​ sheet:

​Connecticut, Inc.
Comparative Balance Sheet
December​ 31, 2019 and 2018
	2019	2018	Increase​ / ​(Decrease)
Cash	$20,000	$25,000	$(5,000)
Accounts Receivable	33,000	36,000	​(3,000​)
Merchandise Inventory	57,000	26,000	31,000
Plant and Equipment	130,000	94,000	36,000
Accumulated Depreciation−Plant and Equipment	​(45,000​)	​(41,000​)	​(4,000​)
Total Assets	$195,000	$140,000	$55,000

Additional information provided by the company includes the​ following:

1. Equipment was purchased for

$68,000

with cash.2. Equipment with a cost of

$32,000

and accumulated depreciation of

$7,000

was sold for

$50,000.

What was the amount of net cash provided by​ (used for) investing​ activities?

A.

​$(173,000​)

B.

​$(18,000​)

C.

$18,000

D.

Answer 1

Ans: The correct option is B.$(18000).

Cash flow from investing activities includes cash received from sale of assets and cash paid for the puchase of assets. Assets includes investments.

Computation of cash provided by (used for) investing activities:

Cash flow from Investing activities
Proceeds from sale of Equipment	$45000
Purchase of Equipment	($68000)
Net Cash used for Investing activities		($18000)

Notes-

1. Profit or loss from sale of assets is of no use for computing cash flow as it affects Income summary statement. Only cash proceeds received will be shown while computing cash flow for investing activities.