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10 January, 12:12

Dover Co.'s comparative balance sheet indicated that the Equipment account increased by $40,000. Upon further investigation of the account changes, it is determined that Dover purchased equipment totaling $70,000 for the year. It also sold equipment with an original cost of $30,000 for $8,000 cash. Assuming these are the only transactions affecting the investing activities, Dover will report net cash flows provided by (used in) investing activities of:

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  1. 10 January, 12:47
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    -$62,000

    Explanation:

    The computation of the net cash flow provided or used by investing activities is shown below:

    Cash flow from investing activities

    Purchase of an equipment - $70,000

    Sale value of the equipment $8,000

    Net cash flow used by investing activities - $62,000

    The purchase represents the cash outflow therefore it is presented in a negative sign while the sale represents the cash inflow therefore it is presented in a positive sign
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