Dristell Inc. had the following activities during the year (all transactions are for cash unless stated otherwise): A building with a book value of $400,000 was sold for $500,000.Additional common stock was issued for $160,000.Dristell purchased its own common stock as treasury stock at a cost of $75,000.Land was acquired by issuing a 6%, 10-year, $750,000 note payable to the seller.A dividend of $40,000 was paid to shareholders.An investment in Fleet Corp.’s common stock was made for $120,000.New equipment was purchased for $65,000.A $90,000 note payable issued three years ago was paid in full.A loan for $100,000 was made to one of Dristell’s suppliers. The supplier plans to repay Dristell this amount plus 10% interest within 18 months. Required:Calculate net cash flows from investing activities. (List cash outflows and any decrease in cash as negative amounts.)

Cash flow from investing activities is a part of cash flow statement. This section deals with the inflow or outflow of cash related to investment related activities. It includes purchase or sale of fixed assets, investment purchase and sale. Negative cash flow from investing activities is a bad sign or indicates poor performance of the company.Net cash flow from investing activities: Sale of building $500,000 Subtract: Investment in Fleet Corp. ($120,000) Purchase of equipment ($65,000) Loan to supplier ($100,000) Net cash flow from investing activities $215,000

Answered: Dristell Inc. had the following…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Dristell Inc. had the following activities during the year (all transactions are for cash unless stated otherwise):

A building with a book value of $400,000 was sold for $500,000.
Additional common stock was issued for $160,000.
Dristell purchased its own common stock as treasury stock at a cost of $75,000.
Land was acquired by issuing a 6%, 10-year, $750,000 note payable to the seller.
A dividend of $40,000 was paid to shareholders.
An investment in Fleet Corp.’s common stock was made for $120,000.
New equipment was purchased for $65,000.
A $90,000 note payable issued three years ago was paid in full.
A loan for $100,000 was made to one of Dristell’s suppliers. The supplier plans to repay Dristell this amount plus 10% interest within 18 months.

Required:

Calculate net cash flows from investing activities. (List cash outflows and any decrease in cash as negative amounts.)

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