In preparing its cash flow statement for the year ended December 31, Reve Co. collected the following data:
Gain on sale of equipment $ (6,000)
Proceeds from sale of equipment 10,000
Purchase of A.S., Inc. bonds (par value $200,000) (180,000)
Amortization of bond discount 2,000
Dividends declared (45,000)
Dividends paid (38,000)
Proceeds from sale of Treasury stock (carrying amount $65,000) 75,000
In its December 31, statement of cash flows, what amount should Reve report as net cash used in investing activities?
a. $176,000
b. $194,000
c. $188,000
d. $170,000
Explanation
Choice "d" is correct. Investing activities include acquisitions and sales of long-term assets or investment assets. Cash used equals $170,000 ($180,000 paid less $10,000 received from the sale of the equipment).
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