A firm sold an investment in securities available for sale originally costing $3

Question

A firm sold an investment in securities available for sale originally costing $30,000, for $28,000. At the beginning of the year, the investment had a valuation allowance of $3,000, debit. What is the correct disclosure for these events in the statement of cash flows prepared under the direct method, assuming this is the only investment in securities available for sale?
a. $28,000 investing cash inflow; add $33,000 in the reconciliation of earnings and net operating cash flow
b. $28,000 investing cash inflow; add $2,000 in the reconciliation of earnings and net operating cash inflow
c. $28,000 investing cash inflow; add $5,000 in the reconciliation of earnings and net operating cash inflow
d. Add $5,000 in the reconciliation of earnings and net operating cash flow.

Explanation / Answer

c. $28,000 investing cash inflow; add $5,000 in the reconciliation of earnings and net operating cash inflow

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