Question

Alp, Inc., had the following activities during the current year: Acquired 2,000 shares of stock in Maybel, Inc., for $26,000 Sold an investment in bonds classified as available for sale for $35,000 when the carrying amount was $33,000 Acquired a $50,000, 4-year certificate of deposit from a bank that was classified as held to maturity. (During the year, interest of $3,750 was paid to Alp.) Collected dividends of $1,200 on stock investments In Alp’s current-year statement of cash flows, net cash used in investing activities should be
A. $37,250
B. $38,050
C. $39,800
D. $41,000

Answer 1

Answer:

Correct option is D. $41,000

Net cash used in investing activities = $41,000

Explanation:

Investing activities refer to those activities in which cash in invested to earn revenue in the form of capital gains, interest, dividend, rent, etc. It do not relate to operating activities of a company.

Here, for the provided information we have,

Cash used in investing activities

Acquired 2,000 shares of Maybel Inc.                       $26,000

Acquired certificate of deposit                                    $50,000

Cash used in Investing Activities                                 $76,000

Cash Inflow from Investing Activities

Sale of bonds, as available for sale                             $35,000

Cash generated from investing activities                  $35,000

"Note; Some consider interest earned and dividend earned as part of investing activity and some consider it as part of operating activity, treating those incomes in operating activity"

Therefore, net cash used in investing activities = $41,000

Correct option is D. $41,000