The Following Data for Larson Co $\bullet$ Equipment Costing $125,000 Was Purchased for Cash

question 129

Multiple Choice

The following data for Larson Co. for the year ending December 31, Year 2, and the preceding year ended December 31, Year 1, are available: In addition to the balance sheet data, assume that: $\bullet$ Equipment costing $125,000 was purchased for cash. $\bullet$ Equipment costing $85,000 with accumulated depreciation of $65,000 was sold for $15,000. $\bullet$ The stock was issued for cash. $\bullet$ The only entries in the retained earnings account were net income of $51,000 and cash dividends declared of $13,000.What are the net cash flows from operating, investing, and financing activities for Year 2?

• A)operating: $112,000; investing: $110,000; financing: $20,000
• B)operating: $112,000; investing: ($110,000); financing: $20,000
• C)operating: $61,000; investing: ($110,000); financing: $71,000
• D)operating: $144,000; investing: ($110,000); financing: ($12,000)

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Definitions:

Costs

The amount of money required to produce or acquire goods or services, including manufacturing, purchasing, and marketing expenses.

Taxes

Compulsory financial charges or levies imposed on individuals or entities by a governmental organization in order to fund public expenditures.

Accounts Payable

Obligations of a company to pay off short-term debts to its suppliers or creditors.

Net Working Capital

This is the difference between a company's current assets and its current liabilities, indicating its short-term financial health and ability to cover short-term obligations.