In Preparing a Company's Statement of Cash Flows for the Most

question 180

Multiple Choice

In preparing a company's statement of cash flows for the most recent year,the following information is available:
$\begin{array}{|l|r|}\hline \text { Loss on the sale of equipment } & \$ 14,000 \\\hline \text { Purchase of equipment } & 225,000 \\\hline \text { Proceeds from the sale of equipment } & 106,000 \\\hline \text { Repayment of outstanding bonds } & 87,000 \\\hline \text { Purchase of treasury stock } & 25,000 \\\hline \text { Issuance of common stock } & 96,000 \\\hline \text { Purchase of land } & 115,000 \\\hline \text { Increase in accounts receivable during the year } & 33,000 \\\hline \text { Decrease in accounts payable during the year } & 75,000 \\\hline \text { Payment of cash dividends } & 35,000\\\hline\end{array}$

Net cash flows from investing activities for the year were:

• A) $234,000 of net cash used.
• B) $120,000 of net cash provided.
• C) $340,000 of net cash used.
• D) $259,000 of net cash used.
• E) $280,000 of net cash provided.

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Definitions:

Periodic Bond Interest

Regular interest payments made to bondholders during the life of a bond.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return, used in discounting and investment appraisal.

Bond Discount Account

An accounting term representing the difference between the face value of a bond and its selling price when sold at less than its face value.

Serial Bonds

Bonds that mature at different intervals over a period of time, allowing the issuer to retire a portion of the bond issue at regular intervals.