Salsedo Corporation\'s balance sheet and income statement appear below: Cash div

Question

Salsedo Corporation's balance sheet and income statement appear below:

  

Cash dividends were $9. The company sold equipment for $15 that was originally purchased for $10 and that had accumulated depreciation of $5. It did not issue any bonds payable or repurchase any of its own common stock.

The net cash provided by (used in) investing activities for the year was:

($66)

($81)

$15

$66

Comparative Balance Sheet Ending Balance Beginning Balance Assets: Cash and cash equivalents $31 $33 Accounts receivable 24 30 Inventory 53 47 Property, plant and equipment 461 390 Less accumulated depreciation 306 256 Total assets $263 $244 Liabilities and stockholders’ equity: Accounts payable $42 $49 Accrued liabilities 16 17 Income taxes payable 39 40 Bonds payable 75 90 Common stock 53 50 Retained earnings   38    (2) Total liabilities and stockholders’ equity $263 $244

Explanation / Answer

because in the begining inventory,the balance old equipment was included.so it should be excluded while calculating invest ment in property plant and equipment.

that means theopening balance is $ 390 .In that,equipment of $10 was sold for $15 during the current year.The balance should be $380 but closing balance is 461.therefore,new property,plant and equipment bought is 461-380 = $81

Calculation of net cash used in investing activities Particulars Amounts Investment in property,plant & Equipment(461-390-10) -81 Sale of equipment 15 -66

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