Question

During 20X1, Craig Company had the following transactions: A. Purchased $199,000 of 10-year bonds issued by Makenzie Inc. B. Acquired land valued at $69,700 in exchange for machinery. C. Sold equipment with original cost of $539,100 for $330,800; accumulated depreciation taken on the equipment to the point of sale was $180,200. D. Purchased new machinery for $120,900. E. Purchased common stock in Lemmons Company for $55,300. Required: 1. Prepare the net cash from investing activities section of the statement of cash flows. 2. CONCEPTUAL CONNECTION Usually, the net cash from investing activities is negative. How can Craig cover this negative cash flow? What other information would you like to have to make this decision? Refer to the list below for the exact wording of an amount description or label within your Statement of Cash Flows. Amount Descriptions Labels Land in exchange for machinery Cash flows from financing activities Net cash from investing activities Cash flows from investing activities Purchase of bonds Noncash investing activity Purchase of common stock Purchase of new machinery Sale of equipment Refer to the list below for the exact wording of an amount description or label within your Statement of Cash Flows. Amount Descriptions Labels Land in exchange for machinery Cash flows from financing activities Net cash from investing activities Cash flows from investing activities Purchase of bonds Noncash investing activity Purchase of common stock Purchase of new machinery Sale of equipment X Statement of Cash Flows (Partial) 1. Prepare the net cash from investing activities section of the statement of cash flows. (Note: Use a minus sign to indicate any decreases in cash or cash outflows. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.) 1 (Label) 2 3 4 5 6 7 (Label) 8 Craig Company Statement of Cash Flows (Partial) Year Ending December 31, 20X1 1 (Label) 2 3 4 5 6 7 (Label) 8 2. Usually, the net cash from investing activities is negative. How Craig cover this negative cash flow? What other information would you like to have to make this decision? Complete the items below that outline a response to the questions posed above. The negative cash flow from investing activities can be covered by using cash from . Some of the activities listed below would provide cash for investment. Check all that apply. taking out mortgages splitting common stock issuing common stock taking out mortgages splitting common stock repurchasing common stock

Answer 1

P1. Prepare the net cash from investing activities section of the statement of cash flows.

Craig Company Statement of Cash Flows(Partial) Year Ending December 31, 20X1

Descriptions Amount

Cash flow from investing activities

Purchases of new Machinery ($ 1,20,900)

Purchase of common stock ($55,300)

Purchase of bonds ($1,99,000)

NonCash Investing activity $ 69,700

Sale of equipment $1,80,000

Net cash from investing activities ($1,95,000)

Q.2 CONCEPTUAL CONNECTION

Usually, the net cash from investing activities is negative. how can Craig cover this negative cash flow? What other information would you like to have to make this decision?

Ans the negative cash flow from investing activities can be covered by using cash by increasing more sales.

if a growing company has a negative cash flow from investing activity it means the company is trying to undertake development activities and its undertaking investment activities by the purchase of fixed assets. the negative cash flow from investing means the company is investing in its future growth. It's important to analyze the entire cash flow statement and all its components to determine if the negative cash flow is a positive or negative sign.

from following activities negative cash flow from investing activities can be rectified by the sale of fixed assets and shares and bonds.

well to look at entire cash flow it can be decided whether the company is doing good or not.